LISA

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Topic Author
Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

LISA

Post by Riftus » Sun Nov 17, 2019 10:14 am

How does a LISA work with a Stocks and Shares ISA?

I currently hold A stocks and shares ISA with Vanguard and am looking to open A lifetime ISA with Hargreaves Lansdown but I am unsure how there two work together since HG invests the money put into the LISA? How is it allowed that a LISA can invest my money but it doesnt come under a stocks and shares ISA???

Topic Author
Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

Re: LISA

Post by Riftus » Sun Nov 17, 2019 10:16 am

Also what are the negatives to a Lifetime ISA?

It seems just like free money whilst also investing my money while a stocks and shares ISA just invests it without the government bonus

minimalistmarc
Posts: 509
Joined: Fri Jul 24, 2015 4:38 pm

Re: LISA

Post by minimalistmarc » Sun Nov 17, 2019 11:34 am

LISA:
- can open if 40 or younger
- can pay in up to 4K / year and get 25% top up ( so 5k per year
- LISA is included in your 20k annual ISA allowance
- can’t pay in beyond 50
- can’t access money until 60 (or buying a house where one or both buyers has never owned property)

In summary, LISA is a wonderful long term savings vehicle.

I have no idea why it was so slated by the press

TedSwippet
Posts: 2512
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: LISA

Post by TedSwippet » Sun Nov 17, 2019 12:12 pm

minimalistmarc wrote:
Sun Nov 17, 2019 11:34 am
In summary, LISA is a wonderful long term savings vehicle. I have no idea why it was so slated by the press.
Meh. It's handy if you fall into a rather narrow category of person, but it's at best an add-on to other things rather than a viable savings vehicle in its own right.

Its low annual limit makes it unusable as a main pension provision. It is unavailable to the over-40s (or over-50s if you already have one), and likely a worse deal than a pension for anybody under 40 who already owns a home or who has no plan to buy one.

The comparison with pensions in particular makes it look at best average, and often either slightly or well below. The 25% bung is equivalent to 20% tax relief, but a 40% taxpayer, or somebody with a salary sacrifice workplace scheme, or the now-required auto-enrolment employer match, or any combination of these, would do better with a pension. No penalty free access before age 60 is worse than a pension's age 55 (although this is scheduled to rise to 57, maybe, sometime).

And while, unlike a pension, there is at least some early access, the penalty for LISA early access is 25% of the amount, which more than claws back the government bonus -- for example, contribute £4,000, receive a bonus of £1,000, then withdraw everything for a penalty of £1,250 leaves you £3,750, less than you started with. 0.75 * (X * 1.25) is not X. I suspect the government hopes most people will not realise this.

Or maybe this is all just sour grapes. I am over age 50 and so cannot have one ... :-)

minimalistmarc
Posts: 509
Joined: Fri Jul 24, 2015 4:38 pm

Re: LISA

Post by minimalistmarc » Mon Nov 18, 2019 6:12 am

TedSwippet wrote:
Sun Nov 17, 2019 12:12 pm
minimalistmarc wrote:
Sun Nov 17, 2019 11:34 am
In summary, LISA is a wonderful long term savings vehicle. I have no idea why it was so slated by the press.
Meh. It's handy if you fall into a rather narrow category of person, but it's at best an add-on to other things rather than a viable savings vehicle in its own right.

Its low annual limit makes it unusable as a main pension provision. It is unavailable to the over-40s (or over-50s if you already have one), and likely a worse deal than a pension for anybody under 40 who already owns a home or who has no plan to buy one.

The comparison with pensions in particular makes it look at best average, and often either slightly or well below. The 25% bung is equivalent to 20% tax relief, but a 40% taxpayer, or somebody with a salary sacrifice workplace scheme, or the now-required auto-enrolment employer match, or any combination of these, would do better with a pension. No penalty free access before age 60 is worse than a pension's age 55 (although this is scheduled to rise to 57, maybe, sometime).

And while, unlike a pension, there is at least some early access, the penalty for LISA early access is 25% of the amount, which more than claws back the government bonus -- for example, contribute £4,000, receive a bonus of £1,000, then withdraw everything for a penalty of £1,250 leaves you £3,750, less than you started with. 0.75 * (X * 1.25) is not X. I suspect the government hopes most people will not realise this.

Or maybe this is all just sour grapes. I am over age 50 and so cannot have one ... :-)
I’m using it to supplement my pension. My wife and I got in by a whisker as we turned 40 so it’ll be 20k free money over the 10 year period.

For higher earners pension still likely to be best but I’d like to see the LISA limits increased and stop the age discrimination which is unfair

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