jester
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Post by jester on Jan 18, 2022 11:04:54 GMT
I'm rapidly approaching the cut off age for Lifetime ISA's, if I want to use them over the next ten years I need to invest now.
On the face of it being given £1000 for £4000 investment seems a no brainer, but given the money is locked up until 60 and the lack of platforms offering it (therefore higher ongoing charges) it's maybe not as cut and dry as it appears!
What's your take on them, unmissable opportunity or a waste of time?
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adrianc
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Post by adrianc on Jan 18, 2022 11:09:53 GMT
Not something that's ever been on my radar, as I'm not within the age band...
AIUI, 18<40 first investment, invest up to 50, withdrawal only for retirement or first home purchase (with caveats)?
Seems a remarkably good rate of return, BUT very tied-in.
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corto
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one-syllabistic
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Post by corto on Jan 18, 2022 12:50:03 GMT
Wasn't an option for me as a SIPP gives you 20 (or 40/45) percent as well but does not count against your ISA allowance. SIPP has potentially high cost in drawdown; worth checking.
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Post by overthehill on Jan 18, 2022 13:28:44 GMT
SIPP v Lifetime ISA
Access to money at 55 instead of 60. Also 20% topup by government (limited to 4000 contribution pa if not working)
Take 25% tax free.
No extra drawdown charges , at least I don't.
EDIT : I removed one line as I didn't realise you got Stocks and Shares Lifetime ISAs
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Mike
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Post by Mike on Jan 18, 2022 13:52:58 GMT
In my view LISAs are no brainers especially if you have maxed your SIPP tax relief for the year (and previous three).
Alternatively if you view your 25% govt. bonus as a loan to leverage investments then it's a potentially cheap one over a decade - the 25% early withdrawal penalty is equivalent to repaying the bonus plus a 25% charge on what you "borrowed". For a year that is steep but over a decade that should work out to be better than anyone else will offer for investment purposes! (I am not suggesting anyone take this view from the outset, just trying to put the early withdrawal fee into perspective - it's not at all punitive IMV)
I use AJ Bell not had any major issues. The bonus does take a few weeks to appear after a deposit. You don't lose much opening one now while you can and thus retianing the option to pay in any 40th birthday postal orders.
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james100
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Post by james100 on Jan 18, 2022 14:11:35 GMT
Depends on your tax position and the trade offs it would entail (if any).
E.g.: if you're a higher rate tax payer already filling your boots with max 40K pension allowance who has already bought a house, wants to retire early, has no additional significant expenditure prior to age 60 (or can meet it through normal income) then absolutely go for it. Probably. Definitely open the account so you keep the option even if you have a bit of a think before moving money in.
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aj
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Post by aj on Jan 18, 2022 14:18:04 GMT
It's worked out well for me as I had purchased the house we live in before getting married; my wife is still technically a first time buyer by lifetime ISA rules so we have built up a nice pot to go towards our next step up the ladder. As homebuyer assistance it's the best option currently available IMHO.
VS a pension it's not so clear cut. After your private pension reaches the size where you'll be paying tax on withdrawal, I'd be tempted to put money into a LISA if the 60 year withdrawal age isn't an issue. As it counts as money that is 'tax paid' you can do what you like with it at 60, no taxman involved.
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jester
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Post by jester on Jan 19, 2022 10:27:07 GMT
Thanks for the input, interesting thoughts on SIPPS vs Lifetime ISA, however I'm maxing out my annual Pension allowance and likely my lifetime allowance too so SIPPS are off the table!
It does appear that the concensus is that the Lifetime ISA is worthwhile in my position, higher rate tax payer, maxed out on pension, tie in to 60 should be ok!
As it's my last year where I can open one but can invest over the next 10yrs once I do, it seems this year is a no brainer.
I see one recommendation for AJ Bell, where else are people investing as Lifetime ISA options seem limited? Hargreaves Landsdown also an option but platform fee seems significantly higher!
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jester
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Post by jester on Feb 10, 2022 14:05:30 GMT
In my view LISAs are no brainers especially if you have maxed your SIPP tax relief for the year (and previous three). Alternatively if you view your 25% govt. bonus as a loan to leverage investments then it's a potentially cheap one over a decade - the 25% early withdrawal penalty is equivalent to repaying the bonus plus a 25% charge on what you "borrowed". For a year that is steep but over a decade that should work out to be better than anyone else will offer for investment purposes! (I am not suggesting anyone take this view from the outset, just trying to put the early withdrawal fee into perspective - it's not at all punitive IMV) I use AJ Bell not had any major issues. The bonus does take a few weeks to appear after a deposit. You don't lose much opening one now while you can and thus retianing the option to pay in any 40th birthday postal orders. Hi Mike, I'm just setting up my Lifetime ISA with AJ Bell. Did you wait until the bonus arrived before investing to save paying the £9.95 fee twice for the original investment and the bonus?
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aj
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Post by aj on Feb 10, 2022 14:31:30 GMT
I believe there used to be a cheat method that gave you cheaper dealing fees if you set up a 'recurring' trade, let it go once then cancel it. Worth checking if it still works!
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