Which LISA

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I’m almost 40 so don’t have long before the cut off date to open a Lifetime ISA.

I already have a mortgage so I’d be saving in it to draw out when I’m 60.

I don’t know much about them. Which would you recommend and why?

Is there a reason you'd rather not put the money into a pension?

I have one with the Nottingham. Started when I was 38, pay in the maximum so by age 50 (you can only add to it until 50) I will have paid in 48k and the government topped up to 60k. It then matures and conservative estimate it will be worth around 105k.
I have a pension and have paid off my mortgage, so I save here to diversify. It’s also tax free when I take it out which is a bonus too.

If you are a higher rate tax payer or a basic rate tax payer who can make contributions to your pension via salary sacrifice, then pension may be a more efficient way to save for retirement. If you are a basic rate tax payer without access to salary sacrifice or low earner then LISA makes perfect sense as you get 25% government "top-up" and you can withdraw funds tax free.

DH saves for retirement into a LISA (in addition to a SIPP) as he is a low earner. He has a stocks and shares LISA with AJ Bell and invests in a global equity index tracker fund. With 20+ years before you can access, stocks and shares LISA would make more sense than cash LISA as stock market compound growth will beat cash returns by some way over that time frame.

If you are really close to 40, I would open ASAP with a minimum amount even if you're not sure whether it's the best long term approach as you'll lose the opportunity to open once you reach 40.

You can access your LISA before your pension (pr at least before it’s optimal to access your pension, depending on scheme) so I am saving into mine alongside pension to bridge the gap between early retirement and mean I can delay drawing my pension until official retirement age.

My Lisa is with Hargreaves Landsdown which is a user friendly platform with relatively low fees.

I used the Moneybox LISA, which was a brilliant help when my DP and I bought our house. My DP had one too.

Dodl LISA (by AJBell), lowest?? fees, nice app. It does have limited investment funds, but some thematic ETFs provide what you need in a simple wrapper.

I just have a Lisa with a building society but I’m intrigued about stocks and shares ones. Can they be transferred?

I have a S&S LISA with Hargreaves Lansdown. I'm happy with it and I invest in individual stocks for retirement. It is completely tax-free on withdrawal so that works better for me than additional pension contributions.

I’ve just recently moved mine from Nutmeg to Dodl after watching these videos
https://youtube.com/playlist?list=PLRjwfVU_qq2aLaAQlHCykANTulzqVsVzF&si=Vhbuwl2kvo2urdjt

They actually recommend AJBell or Hargreaves Lansdown but I was transferring and nether accept transfers so I went with the third best option they reviewed. Hope they help you.

I have stocks n shares with AJ bell. Low fees and range of funds.

I also moved from nutmeg to Dodl. You can invest in the HSBC global tracker I think its called ‘all around the world’. Low fees and the app is very easy.

Money Saving Expert website has done all the research for you…have a look there for current best deals.

I am with Nutmeg...which is JP Morgan. It was recommended by MSE at the time. Definitely open one before you are 40, it is useful to have your long term savings in a couple of different places rather than just in one. And withdrawal is tax free, unlike a pension.

Why a LISA? If you are a tax payer you can get tax relief on much more than £4000 in a SIPP and can access it at 57 under current rules. If pay tax at 40% then even better as you get some of that back. You get 25% back tax free but will pay tax on the rest if you have other income over £12570 when you withdraw it. You will need to run the numbers through a spreadsheet to see which is best for you.

But with the LISA you get the 25% government bonus. You need to work out what’s best for you. My pension is DB with an DC top up and I already put 20% of salary in there with mine and employers contributions. It’s a great pension but heavy penalties for early drawdown so for me having access to some ready cash in a more accessible pot is worthwhile to bridge the gap from early retirement.

It completely depends on your personal circumstances and investment goals though.

These are really helpful. Thank you.