Lifetime ISAs let you invest money for your future to contribute towards a deposit for a house or to use in retirement. LISAs give you a government bonus of 25% of your contributions as well as returns through interest. Compare the best lifetime ISA accounts that let you save a maximum of £4,000 per year of your ISA allowance.
|Featured Lifetime ISA Account||What can you invest in a Lifetime ISA?||How much does a Lifetime ISA cost?||More Info|
|Invest in one of four simple Nutmeg funds built by experts that use exchange-traded funds to diversify across stocks, bonds, industries, and countries.||Account Fee: 0.75% monthly|
Standard Dealing Fee: £0
Discount Dealing Fee: £0
Exit Fees: £0
Minimum Investment: £10
|You can choose to save cash or invest in the stock market, funds or ETFs. Ideal if you want complete control over your investments.||Account Fee: 0.45% monthly|
Standard Dealing Fee: £11.95
Discount Dealing Fee: £5.95
Exit Fees: £0
Minimum Investment: £100
|Shares: Yes |
Ready-made portfolios Yes
|Account Fee: 0.25% yearly|
Dealing charge: From £1.50 per online deal
US Shares: £9.95 plus FX charges
Exit Fees: £0 for cash £9.95 per holding.
Capital at risk,
Lifetime ISA FAQ:
The Lifetime ISA was introduced in 2017 as a way to encourage people to save for their first home, and/or retirement. With a generous government bonus added to your contributions, this is a savings account worth considering as an extra string to your long-term savings bow.
With a lifetime ISA, you can hold cash or invest in stocks and shares wrapped in an ISA, depending upon your preference, experience and attitude to risk.
The Lifetime ISA (LISA) replaced the Help to Buy ISA, which is now closed to new applicants. The LISA lets you save up to £4,000 a year to earn a government bonus of 25% of your contributions, and you can also earn interest as with other cash savings accounts. The £4,000 counts towards your £20,000 annual ISA allowance. You can only use the LISA for two purposes: to buy your first home worth less than £450,000, or for retirement. You can’t withdraw the money unless you are buying a house, you reach the age of 60, or you are terminally ill. If you withdraw early or for any other reason, it will cost you a penalty of 25% of the full value your savings pot, so you lose the bonus and some of your original capital too. You can choose a Stocks & Shares or a Cash version of the LISA. You must be aged 18-39 to open one, and you can pay into it and get the bonus until age 50.
Because it is an Individual Savings Account (ISA) you don’t pay tax on any interest or investment returns your LISA makes, so withdrawals will be tax-free.
While the LISA is designed for long-term savings, for most people they should not replace a workplace pension where an employer pays in too. But self-employed people might find them useful as a retirement savings product to sit alongside a Self-Invested Personal Pension (SIPP).
- You can choose to invest in stocks or save in cash, or a combination of both.
- You can pay in a lump sum or drip feed money in gradually.
- The bonus is paid monthly, so it’s in your account for longer to earn more interest.
- If you saved the maximum amount from the age of 18 to 50, you could earn up to £32,000 in bonuses.
- You can transfer to another provider if you see a better rate on offer.
- If you are buying a house alongside another first-time buyer, you can each have your own LISA.
- Your cash savings are protected up to £85,000 under the Financial Services Compensation Scheme in case your regulated LISA provider collapses.
- The cons are that you can save much less into a LISA than you can into a pension.
- You can’t withdraw money from a LISA without paying a penalty before the age of 60, or to buy your first home.
- The account must have been open for a year before you can use it to buy a house, and there are other conditions attached.
- Having a LISA could affect your entitlement to claim benefits.
Our expert guides on investing are designed to provide an overview and in-depth look at the various different ways to invest and who they are most appropriate for.