No idea about ISA’s

[DustyLee123]

DS is starting Uni but living at home. He’s mentioned putting the bulk of his maintenance loan in an ISA, but his DF says that he could end up with less money than what he puts in.
Is it right that a LISA can only be used to buy a house? And is it right that he could end up with less than what he puts in?

A LISA can only be used to buy a house (there are price limits which could affect London/SE properties) or towards a pension. It is extremely unlikely that the value would go below the investment as the government tops-up by 25%. You can only put £4k into a LISA each year.

Other ISAs are different!

I don’t think a LISA is what he would want then.

ISA is an individual savings account that is tax free. Value cannot go down unless it’s a stocks and shares ISA that is invested in the stock market.

So a cash ISA won’t lose its value, but stocks and shares could?

LISAs are fantastic he could open one with £1 and then set up round-ups from his normal bank account to save without realising it but they aren't what he wants as they are for long term savings and you can't withdraw from them other than to buy a house or retirement without losing the bonus and interest. I use the MoneyBox app (which is linked to a proper bank) and it's great.

In fact I wouldn't use any ISA for holding his student loan money as he'll need near constant access to it. He would have to check the withdrawal regulations on the specific account he wants to open. But a cash ISA won't lose money whereas a stocks and shares one might.

He could put it in Premium bonds if he wants somewhere to store it and draw down X amount a month for spends - no interest but the chance to win and you have access to funds in 24 hours.

Or an easy access savings account with his bank so he can easily transfer his money across as and when he needs it.

@Singleandproud he definitely wants to put it somewhere to invest it as he has a PT job, so can live off that.

If he is sure he won't need access to that money then he could lock it away in a bond for x amount of years Principal Bank normally does some great interest rates but there is no guarantee he won't lose that job or have a hefty course coat like a trip abroad where he would want to use it.

It would be worth you/him looking in the MoneySavjngExpert website. That will give you all the details and pros and cons of different types of accounts.

There are instant access ISAs. Agree MSE website is good for interest rate comparisons of all savings accounts.