What is the Lifetime ISA?


This topic contains 2 replies, has 3 voices, and was last updated by  Keith Crook 8 months, 1 week ago.

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Emily LondonRebellious Renters

What is the Lifetime ISA?

This is not full-fat regulated capital 'A' advice - that costs.And you need to see a financial adviser for that. But hopefully this is some useful food for thought.
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Lesley James

The Lifetime ISA is the latest evolution in the Individual Savings Account. Please be aware, we have details of what the LISA will look like and this is based on that understanding – but officially, this is still provisional as the Government is yet to finally ratify the plans.

However, in outline, the Lifetime ISA launches in April 2017, and will be available to anyone between the ages of 18 and 40. You can save up to £4,000 a year into the plan and, as long as you use it either to buy your first residential property (valued at under £450,000) or for your retirement, you will receive a 25% annual bonus on your money.

The bonus is subject to a maximum of £1,000 a year (if you save the maximum £4,000) and £32,000 in total. That bonus is also available each year until you are aged 50 – which you can get if you start at age 18 and save the maximum for each of the next 32 years.

If you do not buy your first house with the proceeds, or only use some of the money to do so, you can access the rest after age 60 – either as a lump sum or in smaller amounts over a period – and keep those bonuses. However, if you decide to use the money you have saved for anything other than a first house purchase or retirement, you will have to pay the bonuses back: a 25% charge which will be deducted from your withdrawal amount.

In terms of getting into the savings habit and to buy that first house, this is a great way to start – and the bonuses you receive will be your incentive to keep going. That experience of saving for your deposit could also then motivate you to keep going all the way to retirement. There is also the option to invest the money in stocks and shares if you are planning on keeping it for the longer term. However, if you are considering that option, do make sure you understand the risks and that it is appropriate for you.

Investment should only ever be considered for medium and longer term savings. The value of stocks and shares can go down as well as up so there is always the chance you could get back less than you invested.

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Keith Southborough

This is great feedback.


Boring Money Founder and MD Holly Mackay has been working in the investments industry since 1998. She’s a successful entrepreneur and previously established and sold another business which she started when 6 months pregnant with…full bio

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