Investments

Corky said:
You get a 25% bonus from the Gov, they are claiming it back that is all. It is no reason to put anyone off getting one as you don't lose any of your own cash, and still get interest.

For the HTB ISA you only got the bonus at the end so when you bought a house, so it wasn't applied and taken off, but you could only put in £2,400 a year rather than £4,000 and the maximum was £12k you could put in
(5 years), so the LISA is much better.
Click to expand...
Not how the maths work unfortunately mate, from the moneysavingexpert website...

"Withdrawals have a 25% penalty, equivalent to a loss of just over 6%. At first glance the fact you've had a 25% bonus added and then a 25% penalty would seem to leave you back where you started. Yet unfortunately the maths doesn't work like that...
Imagine you saved £1,000 and so got a £250 bonus, you'll have £1,250 total (ignoring interest, for ease). If you then withdrew it and closed the account, the 25% penalty would be £312.50. So you'd get £937.50 back.

In effect, the maths means that withdrawing for reasons other than buying your first home or retirement loses you 6.25% of what you contributed. "

There was even a petition around the unfairness of this...

petition.parliament.uk

Petition: Permanently reduce the Lifetime ISA (LISA) withdrawal penalty from 25% to 20%.

The LISA savings product is designed to encourage people to save for the future by offering a government bonus. Those who withdraw early lose the bonus and pay an additional penalty of 6.25%. This penalty unfairly penalises people who need to be able to access their savings unexpectedly.
petition.parliament.uk petition.parliament.uk
 
Kompany Car said:
With the LISA it depends on what you are planning on doing with the money, it can only be used for 2 purposes:

1. Buying your first property, but if you already own or are on the deeds of another property then it rules you out of using it for buying a second property or using the money to pay off an existing mortgage.

2. Alternatively you can use it as part of a pension which you can can only access from 60yrs old.

If you use it for any other purpose or access the money as part of a pension before 60 you lose 25% in tax.
Click to expand...
And the LISA can only be used to buy a property £450K or less.
A problem if you are darn sarf.
 
Millwallawayveteran1988 said:
The deposit fund is pretty much a cash type fund.
Click to expand...
When I looked at all the different funds on the list and their performance over the years, the deposit fund is pretty stagnant
Is that due to bank interest rates being shite and now they’re up to around 5% it’s a relatively safe bet For a 4/5% return?
 
dickie davies said:
When I looked at all the different funds on the list and their performance over the years, the deposit fund is pretty stagnant
Is that due to bank interest rates being shite and now they’re up to around 5% it’s a relatively safe bet For a 4/5% return?
Click to expand...
It returned 4.1% over the last 12 months mainly because rates have risen. Prior to that it would have been really poor due to the low rates.

You might get 3-4% over the next couple of years unless rates tumble. It’s your 2 year term that is the issue. Investing in other funds over 2 years increases the risk considerably. Deposit funds tend to be invested in very short term money market type instruments so will really only provide returns that reflect the current interest rate environment.
 
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