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  • FIRST POST
    • PingPongSet
    • By PingPongSet 13th Jan 19, 6:33 PM
    • 1Posts
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    PingPongSet
    Lifetime ISA: is 25% bonus a compound bonus?
    • #1
    • 13th Jan 19, 6:33 PM
    Lifetime ISA: is 25% bonus a compound bonus? 13th Jan 19 at 6:33 PM
    I want to understand if 25% bonus is a compound bonus?


    For example:
    1 If you save the full 4,000 in 2018, you'll have 5,000, then
    2 If you save another 4,000 in 2019, would you get 25% on 8,000 (2018+2019), or just 2019?


    Please refer to: moneysavingexpert.com/savings/lifetime-isas/#ntk-2
Page 1
    • Alexland
    • By Alexland 13th Jan 19, 6:36 PM
    • 4,196 Posts
    • 3,519 Thanks
    Alexland
    • #2
    • 13th Jan 19, 6:36 PM
    • #2
    • 13th Jan 19, 6:36 PM
    No you just get 25% on what you have contributed each tax year so max bonus 1k pa.
    • Mr.Saver
    • By Mr.Saver 13th Jan 19, 7:32 PM
    • 131 Posts
    • 35 Thanks
    Mr.Saver
    • #3
    • 13th Jan 19, 7:32 PM
    • #3
    • 13th Jan 19, 7:32 PM
    No, as Alexland said. However the interest on the 25% bonus is compound interest.

    For example, if the LISA has 1% interest:
    On year 1, you put in 4k, and get bonus 1k, at the end of the year you'll get 1% on the whole 5k which is 50
    On year 2, you start from 5,050 from last year, if you put in 4k more at the beginning of the year, and get bonus 1k, you will have 10,050 in your account, and at the end of the year, you'll get 1% on 10,050, which is 100.5
    On year 3, if you do the same again, you will get 1% on 15,150.5, which is 151.505
    • londoninvestor
    • By londoninvestor 13th Jan 19, 8:19 PM
    • 576 Posts
    • 472 Thanks
    londoninvestor
    • #4
    • 13th Jan 19, 8:19 PM
    • #4
    • 13th Jan 19, 8:19 PM
    I want to understand if 25% bonus is a compound bonus?


    For example:
    1 If you save the full 4,000 in 2018, you'll have 5,000, then
    2 If you save another 4,000 in 2019, would you get 25% on 8,000 (2018+2019), or just 2019?


    Please refer to: moneysavingexpert.com/savings/lifetime-isas/#ntk-2
    Originally posted by PingPongSet
    That would be pretty great.

    Starting at age 20, putting in 4,000 per year for 40 years, and getting the compound bonus, then even at 0% interest you'd have 120m to retire on at the age of 60.

    Of course, taxes might have to rise a bit to fund it!
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