Hi all, not asking for bespoke financial advice (obviously) but a request for comment.
Considering a LISA; any recommendations on provider that I can look into? I want to make the most of the bonus by government. I was looking at Nutmeg but I’m not too sure anymore.
Is it even a massively good decision seeing as the max purchase has been 450k for ages?
I have one with Beehive (Nottingham Building Society). Keep meaning to transfer to Moneybox because their rates are better. Previously had Skipton and Nutmeg, all were fine but Skipton’s online portal was quite old fashioned and relied on this ‘code card’ which seemed like a very primitive bit of security.
Where I intend to buy it’s a no brainer, but if I lived in London or another expensive city I wouldn’t touch it with a bargepole. £450k buys you bugger all as it stands. Loads of horror stories of people who had to accept getting back less than they put in even to buy a fairly basic property.
What did you think of Nutmeg? Do the fees make it not worth it? Asking similarly about Moneybox
Was with Nutmeg for a couple of months before Skipton launched the first savings ISA (to get the clock running on the 1 year opened before you can cash out for a house). ISTR whatever the minimum balance was there did rather well, but I’m not much of an investor.
Only used Moneybox for DD creation on easy access savings. App is nice enough.
I use Dodl as it has the lowest fees.
I already maxed out a help to buy isa when buying a house - I understand you can still access the retirement benefits from a LISA? You just can’t use it on a house again?
I also recently opened an S&S ISA - I understand you can open and pay into a LISA with stocks and shares as well as the S&S ISA?
Yeah but you should probably weigh it up against pension contributions before making a decision either way
Also, yes you can pay into both a LISA and a S&S ISA as long as your total contribution is within the £20,000
For anyone with employer contributions to their pension, a LISA for retirement doesn’t make sense. It’s a closer call for the self employed.
I’d just open one anyway, even if it’s only a nominal sum, because of the age limit on opening. It’s main benefit could actually be to squirrel away some inheritance in your 40s…
What’s the limitation r.e a workplace pension? Can’t you benefit from both?
Good advice re inheritance but yeah I’m too young for that thankfully
You can, but the workplace pension will give you much more! So, if you can add the same money to your workplace pension (plus employer contribution) or to your Lisa, the pension will always win.
Plus, now the age you can access your pension is so low, you can actually get your hands on pension money earlier (age 55) than the lisa (age 60). The Lisa was a way for the treasury to cook the books a bit by pushing liabilities down the road. No idea if it worked.
So, if you have cash to put away, the order of priority for almost everyone would be:
Max out workplace pension
Max out private pension (because you can access it earlier, but also you don’t have to stop contributing at 50, like the Lisa)
Max out retirement Lisa
The Lisa probs also is at risk if you go bankrupt and even less attractive in some cases for married couples etc.
Essentially, it’s a solution looking for a problem.
I mention inheritance, because it’s the only time (for most of us) when you may be able to max out your pension contributions.
Awesome thanks for the advice
Also worth considering that any pension pot you’ve built up will be ignored when calculating any benefit entitlement should you need it in future, whereas LISAs will be considered the same as any savings; ergo they expect you to withdraw (even at a loss) if you hit hard times.
You could withdraw all your money from a LISA at 60 without paying any tax though. Also the way things are going the retirement age is likely to hit 70 so 60 will be the withdrawal date for both anyway.
Yeah, there’s uncertainty though. Thinking more broadly, I’d guess that the number of people with much in a retirement Lisa is vanishingly small compared to pensions. Which leaves Lisa holders at risk of being sc***ed over by future changes, imo, just because a future gov may calculate that it will make no difference to election chances anyway.
Rewaking this topic from the dead. I eventually moved the Beehive account to Moneybox in July 2023. The transfer took absolutely ages including a worrying stage when neither side would admit having the money, but eventually it all showed up and Moneybox was great, I found - very clear on interest building up (including a fun little ‘interest earned today’ figure) and when each part would be paid. My favourite feature was the ability to see eachother’s LISA savings combined - silly really since it’s basically the same amount in each but the headline ‘total saved’ was good for the soul when having an off day.
My biggest bug bear with it was when it came to the annual lump sum deposit in March, Moneybox were demanding an open banking payment from the one specific bank account my wife and I both used. Not a huge issue for me but for my wife it involved getting a new debit card sent and all sorts.
I’d personally have preferred to just have an account number/sort code to send the money to.
Bonus rate of interest ended in July and Tembo (formerly Nude) had a cashback deal, so we made our annual deposits again (much earlier than we normally would, which was a bit of a stretch) to ensure we made it over the next cashback tier. I thought we might edge in to a prize draw on Moneybox’s side too but they were too darned efficient transferring the money away - it was all done (form to showing up in Tembo) in 2 weeks.
The one slightly odd thing about the Moneybox leaving flow was they sent an email which implies they wouldn’t be able to have us back, which seems odd to me. I know they had some weird policy at one point that they’d only allow one LISA transfer per person, ever. But if they don’t want our money, I guess that’s up to them.
Tembo’s app is not as good as Moneybox’s. It doesn’t scale nicely (it looks wrong on both screens of my Fold3, actually unusable in parts on the inner screen). Their transferring process is very brittle too - they want you to do it upfront - then when it’s complete they ‘let you in’ including their onboarding flow, which doesn’t let you get past a screen where you’re invited to set up either a monthly DD (£5 min) or a one off deposit (£1 min). Not ideal if you’ve already maximised your LISA contributions for this year, as we both had. We both did a £1 one off deposit (involving open banking enrollment again, sadly) and a couple of weeks later our £1s were returned, and our feedback noted. We are able to see eachother’s balances again, which is very welcome, tho.
Interest breakdown pretty opaque - I guess we’ll see what it all amounts to in a couple of week’s when September’s interest is applied. But it’s earning .3% more than anywhere else, and one can’t really be forgoing that on the sort of sums we’ve saved up between us over the years. I can see us being with Tembo for a while now unless a challenger pulls ahead.
On that latter point, it strikes me as really weird that nobody is getting involved in this market. We can’t be the only couple with our life savings invested in LISAs at this point, and yet the best we can do is seemingly 0.7% down on the base rate. That’s easy money for a LISA provider, surely?
I guess the other option is to gamble on stocks and shares but we’re in a bit of an odd situation not really knowing when we’ll need the money for our first deposit - could be Christmas, but also could be 5 years or more.
LISAs are more pension equivalents if you’re under 40. That said, since you can put it towards a house, those people who are doing it like yourself are probably better to treat it like a cash ISA rather than as an investment vehicle.
If you are intending it for the longer term though, you need to go down the shares route as inflation will just eat away at the value otherwise.
As it is, you don’t have your life savings ‘invested’, you have it in savings.
That’s true, but I guess for my mind the funds are locked away far more than the rest of my savings, as they would be if long term invested. Technically I could have them back but the penalty would be huge.
They’re probably quite a good place to hold your emergency fund too. If you did need it then you would hit the penalty, but emergencies don’t always happen.
I’m not sure I feel the same, I had to make a withdrawal from my Help to Buy ISA when I had one and it massively put me off locking stuff up in LISAs. It was only really when I had enough to start saving and fill our LISAs each year that I began using one, comfortable in the knowledge that there’d be no need for a penalised withdrawal.
The LISA is an interesting product (now that I’ve boned up on it).
Not sure I’d want to consciously hold funds there that I might want before maturity, given the 25% penalty. 