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  • FIRST POST
    • Jimmyc
    • By Jimmyc 4th Aug 18, 9:24 AM
    • 146Posts
    • 35Thanks
    Jimmyc
    S and S Lisa
    • #1
    • 4th Aug 18, 9:24 AM
    S and S Lisa 4th Aug 18 at 9:24 AM
    Hi,

    Iím concidering opening up a S and S LISA to give me a nice lump sum of cash when I hit 60 To pay off my mortgage, have a nice holiday and if I have kids to help them out.

    Iím early 30ís and have maxed out my workplace pension.

    Iím looking to invest £50+ a month, increasing to £100 after a year.

    Im a bit nieve when it comes to investments to I tend to stick to cash investments.

    Question is, Iím not 100% sure how it works, so I pay in an amount each month, and that stays as cash until I invest it?
    Or can I pay straight into an investment fund? Do I pay a fee each month transferring that investment into cash?

    Was concidering AJ Bell is they seem to have the lowest feeís

    Thank you
Page 1
    • Alexland
    • By Alexland 4th Aug 18, 9:51 AM
    • 2,958 Posts
    • 2,309 Thanks
    Alexland
    • #2
    • 4th Aug 18, 9:51 AM
    • #2
    • 4th Aug 18, 9:51 AM
    I'm early 30's and have maxed out my workplace pension.
    Originally posted by Jimmyc
    What do you mean by that - that you are getting maximum employer matched contributions or you are putting enough in to avoid paying higher rate tax? Or maybe both? If you are still paying any higher rate tax then further pension contributions (assuming you haven't hit the pension annual allowance, etc) would beat a LISA.

    so I pay in an amount each month, and that stays as cash until I invest it?
    Or can I pay straight into an investment fund? Do I pay a fee each month transferring that investment into cash?
    Originally posted by Jimmyc
    Depends on the provider; companies like Nutmeg, Share Centre and Moneybox will do all this for you automatically however my view is that DIY platforms such as HL and AJ Bell offer a better value and financial stability proposition for LISAs. It's more work as you add money and invest the contribution/bonuses manually and keep an eye on the cash balance to pay the periodic platform fees.

    The quality of service from both HL and AJ Bell are about the same (pretty average in my experience) so it is really just down to what they will cost you which depends on your contribution profile (regular or lump sum), account balance and investment choices.

    Was concidering AJ Bell is they seem to have the lowest fee's
    Originally posted by Jimmyc
    Remember that AJ Bell charge £1.50 per fund trade so are expensive for your small amounts. You would probably be better with HL (as although their percentage platform fee is higher they have no fund trade fees) investing in something like their discounted Blackrock Consensus 85 which is a mostly passive global equities/bond fund. You won't find a mixed asset fund with such a low percentage charge on AJ Bell.

    https://www.hl.co.uk/investment-services/lifetime-isa

    https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-consensus-85-class-i-accumulation

    Remember with stock market investments to expect the value to go up and down but the long term average over the past few hundred years has been up. Still there will be periods when you are down and you will have to sit tight and not make the behavioral error to sell low. I find this article helpful:

    https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/

    As you get closer to withdrawal it is likely you will want to gradually move into a lower volatility fund to reduce the risk of being impacted if the stock markets are low if you want to withdraw at 60.

    Alex.
    Last edited by Alexland; 04-08-2018 at 10:32 AM. Reason: Added nutmeg article
    • Jimmyc
    • By Jimmyc 5th Aug 18, 11:26 AM
    • 146 Posts
    • 35 Thanks
    Jimmyc
    • #3
    • 5th Aug 18, 11:26 AM
    • #3
    • 5th Aug 18, 11:26 AM
    Thank you for your reply.

    Im maxing out employer contributions, I!m doing 5% they are matching with 10%.

    I dont expect to retire until 65+ and would like a lump some of money a few years before retirement, I would have ideally liked at 50/55 but if I choice a LISA then I get the 25% bonus.

    That was my concern, I know £50 is low and didnt want it been chipped away by fees

    I will look into the option from HL as that makes more sense.

    The link to nutmeg was quite interesting and a good read. Ive had sharesaves before but never really invested in anything else.
    Last edited by Jimmyc; 05-08-2018 at 11:29 AM.
    • Alexland
    • By Alexland 5th Aug 18, 1:00 PM
    • 2,958 Posts
    • 2,309 Thanks
    Alexland
    • #4
    • 5th Aug 18, 1:00 PM
    • #4
    • 5th Aug 18, 1:00 PM
    If you are still paying any higher rate tax then it's worth considering increasing your employee contribution above 5% (even if you get no further employer matching) in preference to a LISA.

    Also for someone in basic rate whose employer enables salary sacrifice NI savings then additional pension contributions give roughly similar benefit to a LISA.

    Good luck
    Alex
    • Jimmyc
    • By Jimmyc 7th Aug 18, 9:10 PM
    • 146 Posts
    • 35 Thanks
    Jimmyc
    • #5
    • 7th Aug 18, 9:10 PM
    • #5
    • 7th Aug 18, 9:10 PM
    I!!!8217;m a basic tax payer and expect to be for a while.

    I know nobody can give me an answer to where to invest, but is there any guide to where to put my ongoing investment? I didn!!!8217;t realise there would be that many funds? How do people make there decision? My decision would be a complete punt !!!55358;!!!56614;!!!8205;!!!9794;!!!65039;
    • Alexland
    • By Alexland 7th Aug 18, 10:08 PM
    • 2,958 Posts
    • 2,309 Thanks
    Alexland
    • #6
    • 7th Aug 18, 10:08 PM
    • #6
    • 7th Aug 18, 10:08 PM
    In which case you would be best going for something fairly passive like the Blackrock Consensus 85 that I suggested above. Such a fund should capture most of the market returns at a low cost.

    People make their decisions based on advertising, research, word of mouth and talking about it endlessly on internet forums...

    Alex
    • Jimmyc
    • By Jimmyc 7th Aug 18, 11:17 PM
    • 146 Posts
    • 35 Thanks
    Jimmyc
    • #7
    • 7th Aug 18, 11:17 PM
    • #7
    • 7th Aug 18, 11:17 PM
    Thank you for your reply.

    Am I best putting the whole fund into the one account or is it best to split over 2? I know £50 a month is a very small amount, but will be £100/£150 in a year once I!!!8217;ve moved and got a few things sorted
    • Alexland
    • By Alexland 8th Aug 18, 6:19 AM
    • 2,958 Posts
    • 2,309 Thanks
    Alexland
    • #8
    • 8th Aug 18, 6:19 AM
    • #8
    • 8th Aug 18, 6:19 AM
    You are only allowed to contribute to one LISA account in each tax year. You get FSCS protection up to £50k but that's going up to £85k from next tax year. Obviously the protection doesn't cover the investments going up and down. 1 well diversified fund choice should be fine for low amounts.

    Alex
    • Jimmyc
    • By Jimmyc 12th Aug 18, 8:00 PM
    • 146 Posts
    • 35 Thanks
    Jimmyc
    • #9
    • 12th Aug 18, 8:00 PM
    • #9
    • 12th Aug 18, 8:00 PM
    I probably worded my last question wrong, I meant fund not account. Will stick with HL but wasnt sure if its worth splitting over 2 funds to minimise risk but think youve answered that.
    Thanks again, account opened and funded.
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