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Lifetime ISA / Stocks and Shares ISA

  • 16-02-2021 10:20am
    #1
    I see sheep
    Registered Users, Registered Users 2 Posts: 2,019 ✭✭✭


    I'd appreciate any thoughts on this scenario -

    (Apologies I live in the UK and I know this is for Irish Investment chat mostly but they are a lot of us over here so hopefully not too off topic.)

    25k in Lifetime ISAs that we were going to use as a house deposit, but decided you're not going to buy a house.

    Would you leave the Lifetime ISAs as a pension top-up (only other way to use this product)or take the money out and just put it into a Stocks & Shares ISA?

    If I leave it in we could in theory keep getting a 2k bonus every year (if we invest 8k into it a year) until we're aged 50.
    But we might also leave the country in the next 4-5 years.

    If I take the money out it will be 20k because you lose the bonus (and will be only 19k after end of this tax year as Covid exemption will be gone, that's why I'm considering it now).

    I'm 37, I've got a work pension (small at the moment).

    I've set up a Stocks and Shares ISA with Vanguard and put a small bit in (what I would have usually put in the Lifetime ISA last month).


Comments

  • #2
    crushproof
    Registered Users, Registered Users 2 Posts: 2,928 ✭✭✭crushproof


    If you're not planning on buying a home and using the LISA as a retirement fund then I would switch to a stocks and shares LISA. I think there's only 2 or 3 brokers which offer this but I would imagine this would grow more than a cash LISA in the long term.

    I personally have a cash LISA as I'm hoping to buy in the next couple of years, so didn't want the short term risk of a market crash and my deposit fund plummeting. However if its long term for retirement then stock and shares LISA is the way to go.
    Since opening, my cash LISA performance has had a return of 25% plus the meagre interest rate.
    In the meantime the return on my FTSE All Cap Vanguard ISA has been 49%.


  • #3
    robman60
    Registered Users, Registered Users 2 Posts: 2,228 ✭✭✭robman60


    I'm also in the UK and considering getting a Lifetime ISA before the end of the tax year in addition to the stocks and shares one I have.

    If you're going to throw it into a cash ISA until retirement, you'd be much better contributing to a pension as you'll save at least 20% if not 40 or 45% on contributions depending on your earnings. In my case, my employer also matches contributions up to a certain amount so if that's the same for you the incentive to do that becomes greater.

    I'd be inclined to say pull it out before April 5th to avoid the penalty on your own contributions, if you don't intend to buy a house. I believe there is also a stocks and shares Lifetime ISA which I know less about so you could also do that.

    Having to wait until 60 to withdraw means you're better off with a pension in my view, unless you're buying a house.


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