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Post by Deleted on Mar 11, 2017 9:30:48 GMT
I know it's off topic but I value the wealth of knowledge and opinion on the forum and wanted to ask what peoples thoughts are on the soon to arrive LISA.
Personally I wouldn't use it over a company pension but I'm maxed out in that area so this would be above and beyond. Perhaps for me my main concern is locking it away until 60 (already a homeowner so that option is out).
There are very few platforms planning to offer it from April but I'm looking at Nutmeg as a hands off approach. Their new fixed allocation portfolio charges 0.45% up to 100k then 0.25%
If I go ahead I'd opt for an adventurous portfolio and just leave it for the next 25yrs. All thoughts very welcome and appreciated!
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archie
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Post by archie on Mar 11, 2017 10:07:39 GMT
Judging by the early retirement thread I think a lot of us may be too old to start a Lifetime ISA.  |
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pom
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Post by pom on Mar 11, 2017 10:09:31 GMT
Not an option for me but if it were...
I think it would depend on overall ISA plans. If you're lucky enough to be looking at using the full ISA allowances next year anyway then you probably don't really need it in the short term and really what have you got to lose by locking up 20% of it and getting free money on top? If your short term circumstances change then it's not like you'll have to contribute to it every year, and I believe you can access it if you really really need it. If the LISA were going to make up most/all of your ISA for the year then it'd be a different thing, but if that were the case I doubt you'd already be maxing out on pensions unless you really like living on beans on toast!
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pom
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Post by pom on Mar 11, 2017 10:10:45 GMT
Judging by the early retirement thread I think a lot of us may be too old to start a Lifetime ISA. Haha my initial thoughts too, but do be nice to the lucky b*****d youngster
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dzo
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Post by dzo on Mar 11, 2017 15:10:47 GMT
I plan to open one, but my circumstances and motivations are quite different. Currently I'm paying the maximum into a Help To Buy ISA to get the 25% bonus. You can only contribute £2400 a year compared to the Lifetime ISA's £4000 limit so I plan to open a LISA and transfer my HTB balance into it. A potential gotcha with LISA's is that they have to have been open for at least a year before you can use them for a deposit so I'm planning to open one on 6th April with £1 and then wait till the end of the financial year before transferring my HTB into it, just in case I decide to buy before then. Once I've used mine for a deposit, I'll have to decide if I want to open another one. I'm not keen on having my money locked away until I'm 60 as I plan to retire long before that, but, as pom points out, it would only be around 1/5th of my ISA portfolio so I'd be unlikely to need it soon anyway. |
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mason
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Post by mason on Mar 11, 2017 16:14:31 GMT
I haven't made any firm decisions yet, but I can see some value in using the LISA to complement conventional pensions. It all does depend on your marginal rate of tax, both now and in retirement.
I'm a basic rate taxpayer and can salary sacrifice into my pension. I imagine I'll retire some way before state pension age and will be using my S&S ISA in the early years until I can draw down my pension (which will probably be at around 60). Presuming things will work as they do now and rates of tax stay broadly the same, I could take the maximum tax free amount from my pension (i.e. 25% tax free amount plus drawdown up to my personal allowance), but above that I'd be taxed at 20%. By utilising a LISA, I have access to income on which I've only paid 12% net tax, before falling back on the excess pension money that will be taxed 20% on the way out and finally my S&S ISA containing income I've paid 32% tax on. So, I would withdraw with the following priorities:
1) Pension tax free amount <-- subject to 0% tax (25% tax free lump sum, plus annual personal allowance)
2) LISA <-- subject to 12% tax (NI) on way in
3) Pension <-- subject to 20% income tax on way out
4) S&S ISA <-- subject to 32% tax (income tax and NI) on way in
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stevio
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Post by stevio on Mar 11, 2017 23:14:27 GMT
I know it's off topic but I value the wealth of knowledge and opinion on the forum and wanted to ask what peoples thoughts are on the soon to arrive LISA. Personally I wouldn't use it over a company pension but I'm maxed out in that area so this would be above and beyond. Perhaps for me my main concern is locking it away until 60 (already a homeowner so that option is out). There are very few platforms planning to offer it from April but I'm looking at Nutmeg as a hands off approach. Their new fixed allocation portfolio charges 0.45% up to 100k then 0.25% If I go ahead I'd opt for an adventurous portfolio and just leave it for the next 25yrs. All thoughts very welcome and appreciated! There is another thread on this exact topic - Admin - can this be merged with p2pindependentforum.com/thread/4778/life-time-isa
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Neil_P2PBlog
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Post by Neil_P2PBlog on Mar 11, 2017 23:18:15 GMT
I make nutmeg 0.64% if you include the 0.19% underlying fund fees: p2pblog.co.uk/compare-robo-advisors-uk/. If moneyfarm have a LISA they will probably be the cheapest. Shame it is not so easy to compare the expected returns performance! |
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Post by Deleted on Mar 12, 2017 8:20:41 GMT
I make nutmeg 0.64% if you include the 0.19% underlying fund fees: p2pblog.co.uk/compare-robo-advisors-uk/. If moneyfarm have a LISA they will probably be the cheapest. Shame it is not so easy to compare the expected returns performance! Cheers Neil, thanks to your blog I discovered Moneyfarm and have used them this yr for S&S ISA. So as I've used up the free 10k the charge for further investment would now be 0.6% plus underlying fees, so I figured Nutmeg would be cheaper. Plus some platform diversity probably doesn't do any harm either!
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mason
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Post by mason on Mar 12, 2017 8:36:29 GMT
I make nutmeg 0.64% if you include the 0.19% underlying fund fees: p2pblog.co.uk/compare-robo-advisors-uk/. If moneyfarm have a LISA they will probably be the cheapest. Shame it is not so easy to compare the expected returns performance! The problem at the moment is how few providers have committed to offering a LISA, which is perhaps unsurprising when the final rules have not yet been agreed. Moneyfarm look like a nice option for someone wanting tactical asset allocation. Another option for those comfortable with a fixed allocation is to simply hold Vanguard Lifestrategy or iShares Core MSCI World ETF with a cheap S&S platform like iWeb, where total costs would be less than 0.25% after the initial £25 account opening charge.
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r00lish67
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Post by r00lish67 on Mar 12, 2017 9:14:46 GMT
Probably worth chipping in to say keep an eye on Quidco/Topcashback for new accounts. They don't specifically mention LISA's right now, but offer £170-£200 for a new account with either, and I imagine that'll include LISA's from April. To me, if you've already maxed out pensions, this sounds like a good idea as if the Government fiddles with the pension release age further (as if they'd do that?  ) , there's a chance they may not adjust the LISA age so it could be a very useful diversification. Plus, who knows, they might decide to be be wish-washy on the whole thing, and offer a get-out for some reason 10 years down the line. Obviously not one to gamble on, but if you're prepared to hold for the long term... |
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Post by Deleted on Mar 12, 2017 10:43:28 GMT
I make nutmeg 0.64% if you include the 0.19% underlying fund fees: p2pblog.co.uk/compare-robo-advisors-uk/. If moneyfarm have a LISA they will probably be the cheapest. Shame it is not so easy to compare the expected returns performance! The problem at the moment is how few providers have committed to offering a LISA, which is perhaps unsurprising when the final rules have not yet been agreed. Moneyfarm look like a nice option for someone wanting tactical asset allocation. Another option for those comfortable with a fixed allocation is to simply hold Vanguard Lifestrategy or iShares Core MSCI World ETF with a cheap S&S platform like iWeb, where total costs would be less than 0.25% after the initial £25 account opening charge. Indeed the lack of options for LISA does rather hinder early adopters but in the name of compounding interest it's better to invest early rather than later, if at all. My knowledge of funds and ETFs is limited and due to lack of time/interest in learning about and attempting to predict markets/which fund managers to use, I suspect it will stay that way for me. I am more than happy to use Robo-advisors but I was unaware of funds such as the Vanguard Lifestrategy which looks like it achieves a very similar outcome with lower ongoing cost depending on platform used to hold it. Thanks very interesting!
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r00lish67
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Post by r00lish67 on Mar 12, 2017 11:33:31 GMT
Would second using Vanguard, either Lifestrategy or just use a blend of their low-cost ETF's (e.g. VUKE=UK, VWRL=World, VFEM=Emerging markets). Re: attempting to predict markets, the general trick IMV is to desperately try and persuade yourself that it's impossible. Twelve months ago, I thought equities were totally totally overvalued and stopped increasing my holdings. Now, a 30% gain later, I can see I was wrong yet again (I also thought that 24 and 36 months ago by the way!). If you are interested in the dark side of market valuations though, I've always found this page very interesting: www.starcapital.de/research/stockmarketvaluationIt effectively ranks countries/regions from least to best value based upon a range of investment metrics. Note that it's latest update is at the end of last year though, due another update soon. Full disclosure: Despite having been wrong for years, I must admit I still can't bring myself to increase my exposure to equities and am considering selling down a bit. The valuations for USA especially appear just nuts. Edit: A large part of that gain, as for most UK investors, is because of currency devaluation of the £ due to Brexit rather than boomingly successful companies. |
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jonah
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Post by jonah on Mar 12, 2017 13:07:16 GMT
Would second using Vanguard, either Lifestrategy or just use a blend of their low-cost ETF's (e.g. VUKE=UK, VWRL=World, VFEM=Emerging markets). <snip> Full disclosure: Despite having been wrong for years, I must admit I still can't bring myself to increase my exposure to equities and am considering selling down a bit. The valuations for USA especially appear just nuts. Edit: A large part of that gain, as for most UK investors, is because of currency devaluation of the £ due to Brexit rather than boomingly successful companies. I use Vanguard LS and specific funds / ETFs in some of my 'pots'. Generally they still have the lowest management fees I find. I agree that the stock market in general 'feels' like it is due to have a hiccup, shake, drop or crash. No idea which or when though. The fed rate change due this week, whilst in theory totally priced in, along with the article 50 declaration, again in theory priced in, might generate a drop or something. I feel like I should be selling out currently but am not yet, probably review that plan in early April. My history with timing in the market is probably average, i.e. awful.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Mar 12, 2017 14:21:08 GMT
The VEVE ETF is another similar alternative to Vanguard Lifestrategy 100 at 0.18% per year: www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1489327333396&chddm=260&cmpto=LON:VEVE&cmptdms=1&q=MUTF_GB:VANG_LIFE_100_J10ZSC&&ei=rlPFWIHqMISOequNiJgM . I still have all my general investments stuck in a collection of funds but am planning to move it across to low cost ETFs like this. So in a perfect world if iWeb were to offer the LISA like @mason mentioned: £5 trading fee on the max £5000 would be another 0.1%, perhaps 0.2% on buying spread, no ongoing platform fees. One thing I'm not sure on- the government said all of the 2017/2018 bonus would be paid at the end of the tax year, but 2018/2019 monthly. So if you put in £4000 in April 10th 2018 would you get the 25% the next month, or just ~2% each month? If they slowly drip feed the bonus it would make it annoying to manually invest! The early exit penalty could be quite easily misunderstood. Perhaps the government will change the rules on this in coming years, or let holders move it on favourable terms into the next new tax free savings product. If you haven't yet had a first house, one 'trick' is to open a HTB ISA now, transfer in £1200 in March and £200 at the start of April, then transfer this into the new LISA for an extra £350 bonus on top of the £1000. |
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) , there's a chance they may not adjust the LISA age so it could be a very useful diversification. Plus, who knows, they might decide to be be wish-washy on the whole thing, and offer a get-out for some reason 10 years down the line. Obviously not one to gamble on, but if you're prepared to hold for the long term...