Author Topic: Should I open a LISA  (Read 1306 times)

Monkeytennis

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Should I open a LISA
« on: August 04, 2017, 04:26:28 AM »
So doing my financial planning recently, I think I'm going to max out my annual pension limit (or hit my lifetime allowance before I'm 55) and my S&S ISA limit. I'm in my mid 30's is the next best / most efficient vehicle a LISA or is it an EIS / SEIS I should invest in next?

Monkeytennis

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Re: Should I open a LISA
« Reply #1 on: August 04, 2017, 07:58:01 AM »
On reading up on this I think LISA's are part of your 20k a year ISA limit

dreams_and_discoveries

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Re: Should I open a LISA
« Reply #2 on: August 04, 2017, 12:42:22 PM »
Yes, the $k LISA is included the same 20k ISA allowance

I'd suggest it is time to go taxable, unless you are comfortable with the very high risk EIS / SEIS.

Depending on your existing income sources, the dividend allowance may come in handy.

Monkeytennis

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Re: Should I open a LISA
« Reply #3 on: August 04, 2017, 04:40:14 PM »
Yes, the $k LISA is included the same 20k ISA allowance

I'd suggest it is time to go taxable, unless you are comfortable with the very high risk EIS / SEIS.

Depending on your existing income sources, the dividend allowance may come in handy.

We have work place share schemes which we get dividends on, need to check on their tax status, yes but if not I think taxable shares might be the next option. Don't have the net worth to go for EIS yet.

frugledoc

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Re: Should I open a LISA
« Reply #4 on: August 05, 2017, 02:06:55 AM »
LISA:
- Can only open one if you are younger than 40
- Can put in 4k per year which is part of your 20k ISA allowance, but government will top up a further 25% (i.e. 1k added if you put in 4k)
- The gov top up is not part of your allowance
- Can pay in every year up till 50

Disadvantage:
- More fees for yet another ISA account
- Can't withdraw before 60 without onerous penalties
- UK government has a very untrustworthy history  for pension changes, and IMO are likely to make the age > 60 and in line with state pension

I'm 39 so undecided.  If it had been a completely new ISA allowance I would definitely be in

frugledoc

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Re: Should I open a LISA
« Reply #5 on: August 05, 2017, 02:09:03 AM »
Regarding EIS and SEIS I have invested a bit through Syndicate Room and Seedrs.

So far I've been put off from further investments, although mine are doing reasonably well.  It is too locked in for my liking, more so than property!

The up front tax relief is nice though, and losses are minimised by loss relief.

AnswerIs42

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Re: Should I open a LISA
« Reply #6 on: August 06, 2017, 05:20:50 AM »
I'm 39 so undecided.  If it had been a completely new ISA allowance I would definitely be in

I'd open one with the minimum possible value, at least. Then you've got another 10 years to decide whether you want to fund it properly or not.

frugledoc

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Re: Should I open a LISA
« Reply #7 on: August 06, 2017, 12:04:49 PM »
I'm 39 so undecided.  If it had been a completely new ISA allowance I would definitely be in

I'd open one with the minimum possible value, at least. Then you've got another 10 years to decide whether you want to fund it properly or not.

Agree that is the most sensible choice and is what I will do

londonstache

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Re: Should I open a LISA
« Reply #8 on: August 07, 2017, 03:16:18 AM »
I'm in for a LISA but already a property owner, so I can't take it before 60.

My thinking is that my S&S ISA is essentially a retirement account anyway, so with the LISA I get a 25% kicker on all the funds put in, which is an unbeatable guaranteed return for an ISA investment. The downside (and admittedly, it's a big one) is I cannot use it as an early FIRE account given the restrictions on withdrawals.

I'm in currently as I'm making enough progress on my DC pension for the lifetime cap (as currently is) to be a potential issue, yet not at the point where I'm able to contribute enough to make the 20k ISA limit for the year. So I'm funding LISA up to max and then switching investment into the regular S&S ISA.

If you are close to the lifetime pension allowance (or on track for it) what is your FIRE date? This would change materially whether it's a good idea or not as I expect to be fully reliant on ISA funds ahead of taking my pension.

Monkeytennis

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Re: Should I open a LISA
« Reply #9 on: August 07, 2017, 06:20:13 AM »
Based on my FIRE date of 44 years old I'd hit the inflation adjusted lifetime allowance at 54 (4 years before I can access it)  so I'm going to have to be mindful of not getting hammered for doing that. I'm going to keep pension saving at my current though as I think equities  are probably over priced at the moment.

The lifetime pension allowance is absolutely stupid, there should be an annual cap, but a lifetime one penalises saving and clever investment decisions.

londonstache

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Re: Should I open a LISA
« Reply #10 on: August 07, 2017, 07:20:19 AM »
The lifetime pension allowance is absolutely stupid, there should be an annual cap, but a lifetime one penalises saving and clever investment decisions.

Indeed and I expect the government will try and move the goalposts again before I retire. I shouldn't be unduly penalised for being a disciplined investor.