The benefits of a LISA

[Michal]

31 minutes ago, vand said:

 

I personally never invest directly in the company I work for as a rule of thumb. You exppose youeself to double risk of your investment underperforming and your job being put at risk if the company underperforms. 

The  out-bound tax relief is entirely valid; I advocate it as a tool to use alongside other forms of retirement savings. That way it reduces the amount of taxable income you need to draw from those other sources. If you can build a LISA pot from which you can draw £x amount on, that reduces the need for you to draw £x amount other taxable sources of income.

Eg, in scenario 1 if I need on £20k/year after-tax income to live on  after retirement then I would need to draw £21,875  gross from my pension of which £9375 is taxable at 20% from which I get:

£21875 breakdown:

12500 (pension @ personal allowance) + [9325*0.8] (taxable pension income) = 20,000

 

 

However in scenario 2 if I had built up a LISA to be able to draw on alongside my pension and could withdraw, say 5k a year from that, I would only need to withdraw £15,625 from the pension, for a lower total of £20,625 overall

£20,625 breakdown:

12500 (pension @ personall allowance rate) + [3125*0.8] (taxable pension income) + 5000 (LISA) = 20,000

I understand your point. My point is that you get only +25% to your money locked up for 40+ years. Just due to inflation ( average 3%) you lost like 120k ( - tax) in alternative investment keeping up with inflation. 

But in your situation it might make sens, simply from my point of view it under-perform a lot. 

About sharesave i understand what you mean, but it all depends what conditions you get and how long plan takes to mature.

[vand]

53 minutes ago, Michal said:

I understand your point. My point is that you get only +25% to your money locked up for 40+ years. Just due to inflation ( average 3%) you lost like 120k ( - tax) in alternative investment keeping up with inflation. 

But in your situation it might make sens, simply from my point of view it under-perform a lot. 

About sharesave i understand what you mean, but it all depends what conditions you get and how long plan takes to mature.

 

A LISA is still an ISA first and foremost; you can use it to invest in whatever you see fit just as you can with an ordinary ISA.

Using 3% return is a very conservative.. I would be quite disappointed to only see 3% real return over 20-40 years of investment. 

The tax bands will move as inflation moves. Of course we can't know for certain if they are likely to move ahead or behind the rate of inflation, but it is reasonable to assume they stay roughly at their current level, and then you can adjust the outlook as the future unfolds year by year.

Sharesave scheme sounds good too and I would not be against it if you had confidence in your company. Everyone must judge their own personal situation. 

[vand]

19 hours ago, MrGeorge said:

Well your idea or rich and mine must be completely different and its £750 free a year dont just be adding 25% on and chatting rubbish like you usually do.

Me burning £1000 is the same thing as not thinking a LISA is a good idea how did you come up with that did your crystal ball tell you 🔮 😂 i  bet you own about 15 cats dont you ? And that cat piss is making you crazy 😆 

Go to the back of the class young padawan

https://www.hl.co.uk/investment-services/lifetime-isa

"As with other ISAs, you can choose to save cash or invest in the stock market, and your money can grow free from UK tax. But the real benefit is an extra 25% from the government of up to £1,000 a year."

[KDave]

The LISA is a trap. It's small potatoes for a reason, get the low income people saving and trap them in the workforce until 60 and if they end up at the knackers yard beforehand they can pay their own disability benefits. It's something to consider only after other options have been explored. 

That said if pension age is put up to 75 a LISA will payout 5 years sooner than a SIPP. They are not making retirement planning easy. 

[tallyhojim]

15 minutes ago, KDave said:

The LISA is a trap. It's small potatoes for a reason, get the low income people saving and trap them in the workforce until 60 and if they end up at the knackers yard beforehand they can pay their own disability benefits. It's something to consider only after other options have been explored. 

That said if pension age is put up to 75 a LISA will payout 5 years sooner than a SIPP. They are not making retirement planning easy. 

Bank of El Mattress is the only safe bet.

[vand]

1 hour ago, MrGeorge said:

Aye ok van 😂 you keep messing with the small potatoes. 

I’d rather mess with small potatoes than be an a$$hole whenever I’m wrong

[vand]

1 hour ago, KDave said:

The LISA is a trap. It's small potatoes for a reason, get the low income people saving and trap them in the workforce until 60 and if they end up at the knackers yard beforehand they can pay their own disability benefits. It's something to consider only after other options have been explored. 

That said if pension age is put up to 75 a LISA will payout 5 years sooner than a SIPP. They are not making retirement planning easy. 

Private Pension/SIPP access age will likely be 58 or more for anyone young enough to have a LISA right now. 2 years is much of a muchness..

 

I kinda strongly disagree with the last part of your post. I think the tax shield vehicles available in this country are incredibly generous. 40k pension 20k ISA and potentially 5k LISA are much more generous that your can get in eg the US

[sovereignsteve]

On 17/08/2019 at 18:40, MrGeorge said:

I bought my house in 2010 didn't know anything about the stock market or investing at the time, so like most uninformed people I thought buying a house was a good investment. If I had put what I paid for my house into a s and p 500 I would be worth so much more than I am today. 

The trouble with that argument is that it is cherry picking. The period from 2010 to today has been a very good and highly unusual period for stock prices, while being poor for property in general. The S&P has risen by about 140%. This against the backdrop of serial interference by central banks and governments to keep the bubble going. In a couple of years the S&P could easily halve or worse. Where would your proposed holding be then?

If you'd have started in late 2007 the S&P rise would have been only around 50%. The all time increase is a little more than 10% pa.

That time also marked the end of a very good period for UK property prices, the previous 12 years had seen a 160% rise in Uk property prices. So it is understandable you bought into the "buy propertry, you will always win" mantra.

Nobody knows which investment vehicle you should be in at any one time, it's a gamble and emphasises why you should always spread your risk.

 

[ilovesilverireallydo]

Just curious @MrGeorge does the earth being flat influence your investment decisions at all? 
 

[ilovesilverireallydo]

1 minute ago, MrGeorge said:

Come on 😆 you need to try better than that, you stick to your silver and let me know how that turns out for you 😂

I am actually seriously curious. Each to their own, but am genuinely wondering if you think the Earth is flat or if its a sarcastic entry on your profile. 

[Roy]

It might explain all the missing boats and aircraft? 😉

[ilovesilverireallydo]

Just now, MrGeorge said:

I like to use it on all forums because it's funny to show people up who mention it soon as there's a argument/debate there losing never fails 😆 

Well thats a relief. Of all the "alternative" "facts" out there, this is the ONE that makes my skin crawl. I dont know why. 

[KDave]

2 hours ago, vand said:

Private Pension/SIPP access age will likely be 58 or more for anyone young enough to have a LISA right now. 2 years is much of a muchness..

 

I kinda strongly disagree with the last part of your post. I think the tax shield vehicles available in this country are incredibly generous. 40k pension 20k ISA and potentially 5k LISA are much more generous that your can get in eg the US

Yes generous until the goal posts change is my thought, the SIPP I thought was ten years behind state pension age hence the rise to 57 for me. If state pension is 75 then SIPP withdrawal would be 65 making the Lisa 5 years better (withdraw at 60) but the risk remains. It's luck of the draw with everything it seems, health, wealth the lot all you can do is plan within the landscape and pray to the gods for a good harvest. 

[ilovesilverireallydo]

6 minutes ago, MrGeorge said:

Oh that's great I am relieved that you are relieved. People like you make my skin crawl don't bother with what other people think just worry about your own thoughts 

I cant. 

[ilovesilverireallydo]

Just now, MrGeorge said:

Right well, let's get into it then. Say my views are different from yours how do you then go about trying to ridicule me? Let's hear the answer 

I dont want to ridicule. I just want to understand. There is no better point of view than another persons perspective. My "skin crawls" comment is prob a reaction to conversations I have had with other Flat earthers that went circular in arguments. At the end of the day - the truth is its neither here nor there - doesnt affect our day to day lives whether it is or not. I am just curious about how others think I guess. 

[Roy]

Yes, why would he want to ridicule you? 

It's not a **** fight. He asked a sensible question, he didn't call you out.

So, MrG, let's hear the answer. (flat earth, i expect you have forgotten)

[CadmiumGreen]

Sorry, couldn’t resist...

[Roy]

Look at those faces!

[Roy]

Lol!

Do you know the best way to confuse an idiot @MrGeorge?

[vand]

40 minutes ago, KDave said:

Yes generous until the goal posts change is my thought, the SIPP I thought was ten years behind state pension age hence the rise to 57 for me. If state pension is 75 then SIPP withdrawal would be 65 making the Lisa 5 years better (withdraw at 60) but the risk remains. It's luck of the draw with everything it seems, health, wealth the lot all you can do is plan within the landscape and pray to the gods for a good harvest. 

I get what you are saying, but it's not really an excuse not to do it. The goalposts do change, sometimes for the worse, but  they do actually change in our benefit quite a lot too. The recent flexible drawdown rules are of great benefit if you like to tinker, opening up things like pension-recycling, and look at how generously they have increased the ISA allowance by almost triple in the last decade too. The introduction of the LISA was as recent as 2017 which I think is hugely beneficial. Yes, state pension age will inevitably have to be raised, but it will also be a gradual thing, 68 for Gen-Xers, probably 70 at worst for Millenials 

 

[ilovesilverireallydo]

55 minutes ago, MrGeorge said:

Your obviously thick as 💩 roy. He asked if me thinking the earths flat affects my investment decisions. Really roy? You thinking that's a sensible question tells me all I need to know about you. 

It wasn’t sensible at all. More tongue in cheek, don’t take offence over it please. 

[KDave]

Yes these and future changes are not excuses not to save for retirement, I think its more encouragement not hold all eggs in one basket and certainly not rely only on state vehicles. As tally said I think we might need a bit more Banco El Matress factored in to the pension planning given the political environment. 

[AuricGoldfinger]

🍿 

[DarkChameleon]

On 09/08/2019 at 05:20, 5huggy said:

SHOOT - need to travel back in time quite some way! 😕

Now where is my time machine (damn Alzheimer) 😁

Seriously tho - your quite right @vand some serious potential to gain from HMRC tax breaks - but these rules can change at the swipe of a pen - - so grab while you can  - if able!

 

Li,e that account for newborns,killed off before anyone could claim the second half.