Best LISA (Lifetime ISA) 2023

Summary

The video script discusses the UK's Lifetime ISA (LISA), a savings product for first-time homebuyers and retirement. It evaluates various platforms offering cash and stocks & shares LISAs, highlighting the importance of fees and service quality. The speaker recommends Moneybox for cash LISAs and compares investing options like AJ Bell, Hargreaves Lansdowne, and Doddle, emphasizing the benefits of LISAs, including the government bonus, tax-free growth, and withdrawal flexibility. The script also contrasts LISAs with SIPP pensions, considering tax relief, benefit claims, and early access to funds.

Takeaways

• 🏦 The script discusses the UK Lifetime ISA (LISA), noting the limited number of platforms offering it and the high fees associated with it.
• 📈 The speaker prefers Stocks and Shares LISA for long-term savings over Cash LISA, except for specific purposes like saving for a house deposit.
• 🏠 The speaker advises against using Cash LISA for a house deposit due to market risks, recommending instead to utilize the government bonus for this purpose.
• 💰 The script highlights the importance of fees and services over interest rates, which are subject to frequent change.
• 🎁 Money Box is recommended for its Cash LISA offering, which is free and offers an attractive initial interest rate, along with a monthly government bonus payment.
• 📉 The speaker criticizes robo-advisors like Nutmeg for charging active management fees while using passive index funds, suggesting they are not the best LISA providers due to high fees.
• 🌐 Hargreaves Lansdowne and AJ Bell are compared, with Hargreaves Lansdowne offering a wider range of investments and no transaction costs for funds.
• 📊 AJ Bell's service, Doddle, is presented as a cheaper option for those with larger balances and a preference for limited investment choices.
• 🤔 The script questions the value of EQI's LISA due to its selling fees on funds and a less flexible website experience.
• 🏢 The benefits of LISA are outlined, including the government bonus, tax-free growth, and the ability to use the funds for a first home, retirement, or in case of terminal illness.
• 💡 The speaker shares personal strategies for saving, advocating for a diversified approach using different savings vehicles like LISA, Stocks and Shares ISA, and pensions.

Q & A

What is the main topic of the video script?

The main topic of the video script is the discussion of Lifetime ISAs (Individual Savings Accounts) in the UK, focusing on their benefits, the best options for cash and stocks and shares Lifetime ISAs, and a comparison with other savings options like SIPPs (Self-Invested Personal Pensions).

Why does the speaker prefer cash Lifetime ISAs for saving for a home deposit?

The speaker prefers cash Lifetime ISAs for saving for a home deposit because they believe it's not worth taking the risk with a house deposit in the market, especially considering the unpredictable nature of market returns and the potential for significant losses.

What is the government bonus for Lifetime ISA contributions?

The government provides a 25% bonus on contributions to a Lifetime ISA, up to a maximum of £1,000 per year, provided the individual contributes the full £4,000 annually.

Which platform does the speaker recommend for a cash Lifetime ISA and why?

The speaker recommends Moneybox for a cash Lifetime ISA because it offers a competitive one-year interest rate of 3.5%, no fees, and the government bonus is paid monthly rather than annually.

What is the speaker's opinion on using Lifetime ISAs for long-term investments?

The speaker believes that Lifetime ISAs are not ideal for long-term investments due to their inflexibility and early withdrawal penalties. They suggest using stocks and shares ISAs for long-term growth and tax-free returns.

What are the main differences between a Lifetime ISA and a SIPP?

Lifetime ISAs have a government bonus, a limit on contributions, and can be used for first-time home purchases or retirement, with penalties for early withdrawal. SIPPs, on the other hand, are pension products with no government bonus but potentially higher employer contributions, and they are not included in benefit calculations or bankruptcy proceedings.

Why does the speaker advise caution when using robo-investors for Lifetime ISAs?

The speaker advises caution with robo-investors because they often charge active management fees but invest in passive index funds, which may not provide better returns than lower-cost passive investments.

What is the maximum amount someone can contribute to a Lifetime ISA annually?

The maximum amount someone can contribute to a Lifetime ISA annually is £4,000.

How does the speaker feel about the current state of the Lifetime ISA market in the UK?

The speaker feels that the Lifetime ISA market in the UK is improving, with more platforms offering them and the fees becoming more competitive, but there is still room for growth and better options.

What are the three scenarios where you can withdraw money from a Lifetime ISA without a penalty?

You can withdraw money from a Lifetime ISA without a penalty to buy your first home, when you reach the age of 60, or if you are diagnosed with a terminal illness.