To tell you to open a Lifetime ISA (and get 25% top up) before you hit 40 and it's too late.

[flashbac]

I wish someone had told me about this.
Invest up to 4k a year and the government gives you 25% top up. However you can only access this money if you buy your first home or at 60 years of age.
The money can then be invested for more growth.
Even if you open it before 40 and put a little bit in at least you then have the option to top up more later.
Do you own research as always. I am no expert. I'm only telling you lot so you don't have regrets like I do.

Agreed. Also open it with a provider that offers lots of different funds as a lot do not allow transfer in after 40 either.

Thanks for the reminder, I just opened mine and it couldn't have been simpler.

@Twotinydictators

Thanks for the reminder, I just opened mine and it couldn't have been simpler.

Because of my post? Or because your were going to anyway? Go on, make my day

Just be aware that they can affect your eligibility to means tested benefits if you lose your job, so you would be expected to pay to draw off the LISA and live on that before you could apply for UC.

I am looking into this but would have liked to open one with my current bank but they don't offer them. Looking online most of the major banks don’t, does anyone know why?

@PenguinIce

I am looking into this but would have liked to open one with my current bank but they don't offer them. Looking online most of the major banks don’t, does anyone know why?

It’s because they’re only useful if you want to buy your first house and can prove really expensive if you use it as your only retirement investment & many banks refused to sell it at all. The best way to save for retirement is into a contributory pension. Then using an investment ISA (with a 20K limit).

I knew this existed for buying your first house, but had no idea I could get one and still receive the free money without spending it on a house. Bugger.

I only found out about this at the start of the year. Did a bit of research and set it up with the Nottingham. I've been telling other under 40's, most have not heard about it.

Pension/SIPP is also something to do, even those without an earned income can have a pension (without an earned income, max contribution annually is currently £2880 which gets tax relief bringing it to £3600).

If you have an employer, join the pension scheme - your employer pays in to it as well as you. Higher rate tax payers get more tax relief via tax return/tax code.

LISA is useful but there are issues, such as not being able to move it once age 40 (I hope the rules get amended, as I don't think it was intended not to be able to be moved).

Also use your £20k ISA allowance (LISA uses up to £4k of that if using LISA).

Take advantage of all things you are eligible for but be aware of limits, accessibility and how they are taxed.

I opened one with Skipton when I was 38 and used it to save for my first property. I couldn't have saved a big enough deposit without it - four years of contributing the maximum £4000 which was then topped up by £1000 a year plus interest.

I saved obsessively to hit the £4000 target each year (single parent), which felt doable (in terms of motivation and going without) because the reward was so clearly there. I would never have tried to save that much, or felt like I could, if that £4000 figure didn't come with the account.

My income varied over the four years - the first year I earned the least, and asked family birthday and Christmas gifts to be money so I could pay it in. PPI refunds from my horrific debt days went in. Doing regular current account switches for £100 and saving it. I sold almost all the nice clothes I had on eBay. I didn't always think I'd make it, but I got quite competitive and would do anything to raise more cash or make savings so the little pie chart in the app tipped into 100% solid colour for the year's allowance.

Having it transferred to the solicitor for exchange was really straightforward (but you do need to request the funds within a certain lead up to the exchange date - I looked into this rather late and had two days to spare!). I really liked the Skipton app and support.

I thought it was 55 when you could take the money out? I don’t mind anyway, my £37.50 is safe and sound 😂 Planning on starting saving properly next year, after we move.

But where does the £1000 come from? General taxation that could go to hospitals/schools? Why would the govmt give this to people?
(I mean, it's great and I'm going to look into getting one...but why not give it to people that can't afford to save?)

It's the same with the 'help to save' account or the children's savings account that existed around 2005-2008 ish.
The government of the day decides to encourage people to use banks and get in the habit of saving.

Help to save would be an example of a similar initiative for people on very low incomes.

www.gov.uk/get-help-savings-low-income

@Ryannah

I knew this existed for buying your first house, but had no idea I could get one and still receive the free money without spending it on a house. Bugger.

I don't believe you can. You can withdraw from it for any reason but I'm sure (at least when I opened mine) that you ONLY get the bonus if you use it to purchase a house

It's not much different than a normal pension, if you aren't using it to buy a house. You can claim back income tax on money you pay into a pension fund which is equivalent to a 25% top up (for a basic rate tax payer) and higher for higher rate tax payers.

They are very restricting. Unless you are using it to buy your first home, relatively promptly, i wouldnt bother.

@ThreeFeetTall

But where does the £1000 come from? General taxation that could go to hospitals/schools? Why would the govmt give this to people? (I mean, it's great and I'm going to look into getting one...but why not give it to people that can't afford to save?)

Is that a serious question?

I signed up when I was 39. As long as you sign up before you hit 40 you can continue to pay in £4k and get £1k in bonus each year. It's the best safe savings account out there by miles and should be done in addition to the standard ISA ad workplace pension. It's so surprising how many have not heard of this as when it was launched it was advertised heavily in the press.

I have one because I'm self employed and my pension provision is no where near my employed dh's. Any extra money for retirement is a good idea.

@bingoitsadingo

It's not much different than a normal pension, if you aren't using it to buy a house. You can claim back income tax on money you pay into a pension fund which is equivalent to a 25% top up (for a basic rate tax payer) and higher for higher rate tax payers.

I thought you only get 20% back?

This isn’t accurate. You get the 25% top up up to a contribution of £4000 regardless of whether you use it as a house deposit or choose to withdraw at retirement. There are penalties if you withdraw for any reason other than these l.

Anyone know if you can transfer your help to buy ISA into a LISA and there any point in doing this ?

I thought you only get 20% back?

Income tax is 20% If you put in £80 then it is topped up to £100 because that is the amount you would have been paid before the tax was taken off. But £20 is 25% of £80. Does that make sense?

@Reallybadidea

I thought you only get 20% back?

Income tax is 20% If you put in £80 then it is topped up to £100 because that is the amount you would have been paid before the tax was taken off. But £20 is 25% of £80. Does that make sense?

So I haven't lost out by missing out on the LiSA?