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  • FIRST POST
    • KrzyKat
    • By KrzyKat 9th Mar 18, 12:20 PM
    • 2Posts
    • 0Thanks
    KrzyKat
    Lisa retirement advice
    • #1
    • 9th Mar 18, 12:20 PM
    Lisa retirement advice 9th Mar 18 at 12:20 PM
    Hi

    I'm new to the serious business of saving for my retirement. I am looking at starting a lifetime isa as an extra bit on top of my company pension. I'm planning on saving the full amount each year until I'm 50 (scarily to close). Has anyone got any advice as to which provider to use? Or any to avoid?
    I would like to see my money beat inflation by the time I'm 60 and ready to spend it
    Thanks
    Kat
Page 1
    • aj23
    • By aj23 9th Mar 18, 12:39 PM
    • 534 Posts
    • 184 Thanks
    aj23
    • #2
    • 9th Mar 18, 12:39 PM
    • #2
    • 9th Mar 18, 12:39 PM
    Hi

    I'm planning on saving the full amount each year until I'm 50 (scarily to close).
    Originally posted by KrzyKat
    How old are you? If you're over 40 you can't open one.

    Skipton is the only banking based one, which if you deposit the max with give you a 1k bonus every year, while there are many Stocks and Shares LISA's you can use to invest in but you could potentially lose many as it is investing in the stock market.
    • eskbanker
    • By eskbanker 9th Mar 18, 1:28 PM
    • 7,446 Posts
    • 8,025 Thanks
    eskbanker
    • #3
    • 9th Mar 18, 1:28 PM
    • #3
    • 9th Mar 18, 1:28 PM
    I would like to see my money beat inflation by the time I'm 60 and ready to spend it
    Originally posted by KrzyKat
    Assuming you're under 40 at the moment and thus eligible to open a LISA, then keeping pace with inflation would be challenging if using a cash LISA rather than an S&S one.

    Yes, contributions are topped up by the one-off 25% bonus (as they are with S&S LISAs) but the value of that would be eroded steadily over the following 20+ years of sub-inflation interest - the Skipton product currently offers 0.75% interest, versus 3% CPI or 2.7% RPI, so if you were using it for long-term saving then you'd be guaranteed to lose out to inflation if those rates all continued in similar proportions.

    S&S investing is generally considered a good idea for long-term planning, as this mitigates against the volatility seen over the short term. It wouldn't be unreasonable to expect gross returns of, say, 5-7% from a well-diversified portfolio, which can be as simple as putting it all into a single low-cost global multi-asset fund for those who aren't experts....
    • Alexland
    • By Alexland 9th Mar 18, 5:54 PM
    • 2,580 Posts
    • 1,958 Thanks
    Alexland
    • #4
    • 9th Mar 18, 5:54 PM
    • #4
    • 9th Mar 18, 5:54 PM
    Skipton is the only banking based one, which if you deposit the max with give you a 1k bonus every year, while there are many Stocks and Shares LISA's you can use to invest in but you could potentially lose many as it is investing in the stock market.
    Originally posted by aj23
    Holding cash in a LISA for 20+ years would be a complete disaster as you would be losing circa 2% to inflation each year compounding. S&S is far more appropriate and likely to deliver an above inflation return in the long term.

    Alex.
    • aj23
    • By aj23 9th Mar 18, 6:23 PM
    • 534 Posts
    • 184 Thanks
    aj23
    • #5
    • 9th Mar 18, 6:23 PM
    • #5
    • 9th Mar 18, 6:23 PM
    Holding cash in a LISA for 20+ years would be a complete disaster as you would be losing circa 2% to inflation each year compounding. S&S is far more appropriate and likely to deliver an above inflation return in the long term.

    Alex.
    Originally posted by Alexland
    If you want to invest in stocks, whereby you could lose money, plus the handling and account fees which come with them.
    • ChesterDog
    • By ChesterDog 9th Mar 18, 6:57 PM
    • 879 Posts
    • 1,650 Thanks
    ChesterDog
    • #6
    • 9th Mar 18, 6:57 PM
    • #6
    • 9th Mar 18, 6:57 PM
    If you want to invest in stocks, whereby you could lose money, plus the handling and account fees which come with them.
    Originally posted by aj23
    Investing longterm in a well-diversified, global, fund or funds (especially a multi-asset type) or global index trackers might lose some value from time to time, but you won't actually lose money as such unless you sell it - or part of it - while the value is down.

    In the longer term, it will gain considerably in value, unless the global economy collapses. In such a scenario, the figures won't even matter.
    I am one of the Dogs of the Index.
    • KrzyKat
    • By KrzyKat 9th Mar 18, 7:04 PM
    • 2 Posts
    • 0 Thanks
    KrzyKat
    • #7
    • 9th Mar 18, 7:04 PM
    • #7
    • 9th Mar 18, 7:04 PM
    Hi
    Thanks for all the replies.
    I am just scrapping the age eligibility. I have been looking at the s&s lisa but I'm unsure of which company will be the best for me. What should I look for to decide which one? What measure do you use when choosing investment companies?
    In the mean time if I were to open a cash lisa whilst I figure it out will I be able to transfer it to the s&s one?
    I'm also trying to find out how the bonus gets paid after this year - is it the full 25% no matter if I pay in the max at the start of the year or if I pay in regularly?

    Thanks
    Kat
    • Alexland
    • By Alexland 9th Mar 18, 8:32 PM
    • 2,580 Posts
    • 1,958 Thanks
    Alexland
    • #8
    • 9th Mar 18, 8:32 PM
    • #8
    • 9th Mar 18, 8:32 PM
    I would chose a S&S LISA provider based in the investments they offer and the fees that would occur.

    My view is the top 3 providers in no particular order are Nutmeg, HL and AJ Bell YouInvest.

    Nutmeg is nice and easy with quality investment portfolios but they are a loss making company but there is still FSCS protection if they fail.

    HL and AJ Bell both offer thousands of investment options (so research is required) and are more complicated DIY platforms. AJ Bell YouInvest have the lowest ongoing fee but charge at least 1.50 for fund trades which are free on HL. You might chose to do limited research and just invest in a low cost multi asset fund such as Vanguard LifeStrategy which would give similar results to Nutmeg.

    Given that Nutmeg and AJ Bell don't have any fees to transfer out you might as well skip the cash LISA and open a S&S LISA from the start.

    The bonus is still 25% of the contribution regardless of when during the tax year the money is contributed.

    Alex
    Last edited by Alexland; 09-03-2018 at 8:39 PM. Reason: Typo
    • FIRSTTIMER
    • By FIRSTTIMER 11th Mar 18, 5:36 PM
    • 328 Posts
    • 53 Thanks
    FIRSTTIMER
    • #9
    • 11th Mar 18, 5:36 PM
    • #9
    • 11th Mar 18, 5:36 PM
    this is exactly my dilemma - which one to go for - I want to invest the full amount yearly but do not want to pay a financial advisor thousands to set it up if I can do it myself. I just don't know which is best company. I prefer to open one and leave it for someone else to manage the funds and make sure I am getting a good return long term....
    Savings 10000
    • dunstonh
    • By dunstonh 11th Mar 18, 5:54 PM
    • 93,034 Posts
    • 60,418 Thanks
    dunstonh
    If you want to invest in stocks, whereby you could lose money, plus the handling and account fees which come with them.
    Originally posted by aj23
    Savings accounts have fees. You dont think the banks offer them out of love do you? The difference is that the fees are hidden an not charged explicitly. They set an interest rate that factors in a margin.

    Investments have fees. Except they are not factored into the returns but charged explicitly.

    It would be very foolish to make financial planning decisions on the basis of thinking cash savings is free and that makes it better.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ValiantSon
    • By ValiantSon 11th Mar 18, 9:39 PM
    • 2,023 Posts
    • 1,873 Thanks
    ValiantSon
    this is exactly my dilemma - which one to go for - I want to invest the full amount yearly but do not want to pay a financial advisor thousands to set it up if I can do it myself. I just don't know which is best company. I prefer to open one and leave it for someone else to manage the funds and make sure I am getting a good return long term....
    Originally posted by FIRSTTIMER
    You need to identify the funds that you wish to invest in. A good starting point may be to look at multi-asset funds like Vanguard LifeStrategy, HSBC Global Strategy, L&G Mulit Index, or Blackrock Consensus. You can search for details of them all (including the different asset mixes) here: https://www.trustnet.com/ You will need to determine your risk appetite to decide on the exact mix of assets.

    While you are thinking about the above you should learn a bit more about investing. Have a look at the following website to begin to learn more: http://monevator.com/
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