Lifetime ISA - Cash or S&S?

[breadmilkandchocolate]

I have decision paralysis, so looking for a steer!

I want to put £4k into a LISA for my son's 18th birthday, and plan to top it up by £4k a year until he is ready to buy his first home. Obviously we don't know when that will be but he's showing signs of being a high earner who will want to settle down early, so best guess is 5-10 years (potentially with deposit topped up by additional funds from an inheritence). We need to decide between a cash LISA and a S&S LISA. The cash interest rates are rubbish, so s&s is very tempting, but it seems to me that the risk of a market turbulence is too great for something as critical as your first home - paying months of additional rent while waiting for a downturn to reverse itself could more than wipe out any growth. Thoughts?

I'd go S&S at least now, as 5-10 years is quite a long time, and long term investing is generally positive when diverse. Perhaps start moving to lower risk/cash closer to the anticipated time it needs to be used.

One question though. Am I right in thinking that your DS will be in control of the LISA though? I.e. He'll need to transact the S&S purchases. Plus he'll be able to transfer or even withdraw if he wants, not when you want?

Wouldn't it be better to let him make his own decisions?

Yes, I'm aware my contribution will be a gift and he will have control. I will help him to set up the account and give him some guidance, but it is then up to him whether he follows it or not.

Id definitely encourage S&S for him as it’ll be a decent time frame. It’s a good opportunity to teach your son a bit about investing if he’s not already aware. The difference between S&S and interest etc. He won’t need to get too savvy as a few S&S LISAs are very straightforward, for example MoneyBox just has 3 tiers depending on your appetite for risk.