Forgot the "Under The Mattress Option"! YOU CAN SET UP A STOCKS & SHARES ISA AND A SIPP ACCOUNT WITH FREETRADE GET A FREE SHARE WORTH UP TO £200 WHILE YOU'RE AT IT magic.freetrade.io/join/sasha-yanshin You need to sign up and make any deposit to get the free share. I will get a free share as well.
@@benojika1851 If I am honest I am not sure - I don't have one and they very much look very similar to me overall. Different people will probably have different preferences based on specifics.
Sasha can you do a video on wheres best to hold your emergency fund - I've been looking at premium bonds as they seem to pay the most for accessible cash. Your thoughts would be interesting
LISA is brilliant for first time buyers. Both my partner and I opened Help to Buy ISAs the day they opened then transferred them to LISAs when they opened. Over about 4 years we made over 8/9k as we were allowed to claim 25% on everything we had already saved in the H2B.
@@stephenbrown8415 Nope. As long as both are first time buyers, both LISAs can be used. Quote from the Gov page linked below: "If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too." Check here for details: www.gov.uk/lifetime-isa
LISAs are great but it's a shame they have such low interest (esp these days) and the restrictions are a bit much. I'm happy they lifted the restrictions for this tax year so I could test it out to see if I wanted to use it for buying a house or retirement. But right now I think I'll be sticking to a SIPP and S&S ISA.
@@SashaYanshin Normally with a LISA if you take money out you lose 25% because of the bonus but this means you actually lose some of the money you put in. With the pandemic they have lifted this restriction so you only lose 20% thus you get back what you put in if you need the money and decide to withdraw it. Really it makes more sense this way anyway, so hopefully they keep it.
@@SashaYanshin exactly what TheLittleThings said. There used to be a 25% penalty to withdraw if you weren't buying a home or in retirement. That meant you lost some of your intial deposits and the bonus. They've reduced it to 20% until the 5th April 2021 which means you get all your initial deposits back and any interest gained but minus the government bonus.
@@AbiChow Ah yeah. Both seem almost the same to me as with the penalty in place, I wouldn't put money into a LISA if I did want to withdraw it but fair point.
Firstly, immense thanks for your exceptionally informative series: so loaded with second-to-second superb insights! I've been wondering about the strategy of 'Maxing-out' on ISAs - whether it would be just as well do so, year after year, as to buy long-term shares on a typical basis? Noted: there's "no downside" and beyond ISA's there's currently a 12k allowance for capital gains... so are there any straightforward 'upsides' when playing long-term and having to push towards putting 20k away?
Are you asking whether there is an upside to investing in a regular investing account over an ISA? Not really when it comes to numbers - some benefits include a wider selection of markets and stocks and additional features (like being able to hold $ in your account with providers that allow it) but that's about it.
Thank you. I keep hearing about the American and British and European governments printing silly money and flooding the economy with it. This will lead to inflation and so our savings will depreciate in value. Many folks are predicting a subsequent economic crash sometime in the near future as all the debt world leaders/banks have accrued is unsustainable. Britain is 1.3 trillion pounds in debt! My question is, if there is an economic crash, how can we prepare?
I don't prepare for these things and I personally think some of the thinking around the total amounts of debt are not taking into consideration the sort of mechanisms governments can employ over time to manage them so I am not immediately concerned on that part.
I currently pay everything over 40% threshold into my pension, then max out my LISA so in effect paying less than 20% tax, the remainder goes in to S&S ISA. Is there a way to be more tax efficient in the long run?
So you don't think you should try and add the max to the LISA to get the gov contribution? I'm in my early 40s and have a home, so I don't need it for that. I do have a pension now and am in the higher tax bracket, so feel I should make use of that extra 20% tax break? I also have some money in the S&P 500. Unsure what I should be putting most into at this point.
Very different things - I do occasionally talk about it in some videos but Vanguard is just a place to invest in funds and even if you want to invest in ETFs, Vanguard is actually more expensive than some other platforms for investing in things like the Vanguard S&P 500 ETFs because of the management fee... Will definitely make some content on this as people do keep asking though!
I'm 19 and I'm paying £100 into my Lisa every month which is invested in different ETFs. I don't know if it's a good because of my age but should be enough for a downpayment on a house (especially if the 5% downpayments are coming back)
Have you not thought about a help to buy ISA? You get 25% (40% if in london) if you use the money saved to buy a house (example: save 12k get 3k when you buy a home)
@@jacobconcannon4677 I haven't got one as I hadn't done any investing art be time the applications closed for them so I'm stuck with a Lisa instaid I guess🙄
I am 19 and am thinking about starting my pension. I already have a LISA and an ISA. However if I use my LISA as my pension why would this not be better than a pension. I get 25% return guaranteed along with any growth on my investments. Yes I miss out on a 3% employee contribution and have to pay income tax on this amount but like you said all my gains are tax free unlike a pension which is only tax free on the first 25%.
You have a good point in some respects, however with pension you can draw first 25% of the accumulated pot completely tax free, also one has to also assume that you will also be able to draw approx 12k pa tax free, ie the current rate at which income tax would start. This would mean it works out better for moat tax payers (especially those higher rate tax payers getting a 40% releif rather than the 25 theyd get at inception on the isa). Where this all flips around is that at some point you will hit taxation on the pension, and once youve got a pension big enough to trigger that, then i would personally say it would have been beneficial to utilise the LISA allowance in a stocks and shares isa in collaboration with paying into pension, as when you eventually come to draw down you'll get the benefits of both. Its very complicated to give exact answers on this stuff.
Let's say £100 is 3% of your monthly income. If you contribute £100 into a stocks and shares LISA, you get a £25 topup,which is a 25% topup, plus any gains from what the LISA is invested in. If you contribute £100 into a pension, you get £25 topped up in tax relief, plus £100 matched contribution from your employer. You're getting a 125% topup with a pension, plus any gains from what the pensions are invested in. And in most cases, this difference is big enough that after many years of compounding growth, you have more money left over EVEN AFTER the taxes you'd pay when taking pensions out.
1. Have opened one ISA account in HSBC ( LOY_ISA_Adv) ( In OCT 2023) and deposited 20000.00 GBP and withdraw 5000.00 GBP in March 2024 . 2. I opened one more Cash ISA in NatWest in March 2023 and deposited 20000.00 GBP 3. Have opened in March 2024 one more ISA account ( march 2024) and deposited 20000.00 GBP and withdraw all amount in one day in Halifax . Here my question is can i have any tax issues or penalties from HMRC as i have two ISA accounts with 20000.00 GBP amount in each account ? Requesting for your kind advice
I agree that most LISA providers do offer high fees, but EQi offers a flat 0.2% fee, and allows you to invest in low cost funds which include vanguard funds. This to me seems like a better option than a SIPP for a basic rate taxpayer, as you're effectively reclaiming all of your tax (giving 25% is the same as not taxing 20% in the fist place). If you put your money into a SIPP you have to pay tax on most of your cash when you withdraw it in years to come, assuming you'll be withdrawing more than the tax free allowance. Interested in your thoughts?
They sure shout from the rooftops about their "Cheapest in the UK" 0.2% annual fee, but hide the £10.99 commission on all share trades (buying AND selling) and £9.99 on ETFs. Even the small selection of funds (which have very poor optics) charge £10.99 to sell, although they proudly print a big £0 for buying to make it look cheaper than it is. I am generally not a fan of a platform where right upfront the intention is to hide the real pricing and deceive (e.g. zero mention of these fees on the main LISA page) so that's a load of thumbs down from me.
@@SashaYanshin I do agree they could be more open about the pricing, although the pricing structure wasn't so opaque and confusing that it raised a red flag for me. I actually was about to fall foul of the £9.99 ETF commission, but I was very prominently told just prior to the point of purchase that I would be charged. This meant I could go for the vanguard S&P500 fund as opposed to the ETF. If you take all your money out in one go or in a few large chunks at 60, it should attract a negligible cost (?)... at least this is what I think, but I'm very new to this 😂. Perhaps not paying attention to the potential ethical red flag you point out, may well come back and haunt me. When you say poor optics- do you mean the visual representation of the data or does it have another meaning?
I'm so long term that I see my ISA and Pension as equal investing tools. I'm 25 and very bullish on my pension, currently putting in 47% of my salary via salary sacrifice. I plan to FIRE as soon as I hit 57 or years before that in anticipation that I know I'll get a hefty lump sum to pay off every debt including home.
Good luck with it - be careful not to breach the Lifetime Allowance of whatever level it may be in 32 years' time or you'll be paying most of your money over the threshold in tax - if you're putting in a lot early, there is every chance of hitting it even if you retire early.
Good breakdown, especially since I am looking at stuff like this at present. What are your thoughts on using a part of your savings (in my case aiming for retirement) to invest in crypto. I obviously know it is higher risk for higher reward, but just trying to find out what you think
What makes you think LISA’s have low returns & high fees? Hargreaves Lansdown’s LISA fees are no different than for a S&S ISA and returns governed by your investments which is your choice....
Because the max you can put in is only £5k. You will then pay a 0.45% annual fee (£22.50) plus £11.95 per trade. So to invest in 10 companies for example (not particularly diversified but partly because they don’t do fractional shares anyway), you’re paying £120 to buy and another £120 to then sell. So say you buy a house in 12 months’ time, you have spent over £260 on fees alone - over 5%. And if you contribute less than £5k per year, the % fees are higher. Charging that amount is insane. If you make ANY additional trades during the year, you are pushing 10% on costs...
But those trading charges don’t apply when purchasing funds rather than individual stocks no? For example Legal & General US Index’s net ongoing charge is 0.06% with an initial charge of 0.00%.
@@kennybother8583 Sure - but that is the exact point - in a Stocks & Shares LISA you can only invest in proprietary funds or ETFs at best and there is no real way to buy into actual stocks. Yeah - an S&P500 equivalent ETF is good and is actually very good for the passive investor. Also - I just double checked to confirm my bad memory. ETFs also get charged £11.95 trade fees on the HL LISA based on their website & there's the additional reinvestment charges on top. So if you are contributing in anything other than 1 lump sum per year, the fees will still stack up on what is a small portfolio.
Great video! For amalgamating previous workplace pensions, do you see any downsides to bringing these into a SIPP? Still have my current workplace pension ongoing. Also the lifetime pension limit…stupid question but that’s across all pensions right? :)
Yep - the limit is across all private pensions - would be a very easy way to avoid it otherwise! I have moved all of mine into a SIPP BUT there are definitely downsides as well. 1. All your eggs are in one basket. Should something happen with the company - that may be a higher risk (although there are a lot of protections on how your money/assets are held) 2. SIPP pensions may have a higher risk and higher volatility - especially if you directly invest in stocks & shares. That is something that people need to be very aware of. 3. SIPP pensions may require more active management than traditional options that many often do a set and forget on. There's probably a load of others too - just 3 off the top of my head.
@@SashaYanshin Thanks! I personally prefer the idea of having more of these invested in stocks & shares at my age even though there is potential risk. The active management is certainly a bit of a downside but checking on my investments a handle of times a year I feel is worth it. :)
If i'm on roughly 30k a year what sort of pension contribution should i be paying? I currently pay 5% and my employer 8% but i can change my own personal contribution. I am 52 already have 24 years in a defined benefit pension. Now i am in a defined contribution pension as company could not afford to continue with defined benefit scheme.
Remember that you need to figure out what the value of your defined benefit pension will be and how that impacts your proximity to the Lifetime Allowance - those pensions can have much higher valuations than defined contribution. As you get closer to retirement (especially if you're planning to do it early), contributing more begins making a whole lot more sense subject to not going over that limit.
so AJ Bell says "You should carefully weigh up whether you want to save into a Lifetime ISA instead of enrolling in a workplace pension scheme as this would mean you’d lose the benefit of employer contributions." - as currently I am enrolled in a company pension scheme, does that mean that if a open a lifetime ISA to buy my first home I will lose pensions benefits from my workplace?? thanks in advance for a response
No, you wouldn't. That statement is a little misleading - the two are completely separate things. Sure - if you STOP pension contributions and switch to using the LISA only this would apply. But getting a LISA has no direct impact on what you do with your pension or what happens with it - the two are entirely separate things.
Hello. Quick of topic question please. I'm self employed and i pay tax with every payslip. Does that tax include pensions aswell? And if yes will i be able to take all my pension money at once when i retire? Thanks 🤜🤛
There's a difference between state pension which is simply a form of welfare and private pension. If you don't have a private pension provider set up and don't specifically deduct money to it, then the answer is no - you don't have payments going towards your pension. The Government does not take separate payments towards your state pension.
Which walks right into my point on fees with £9.95 charges per trade on shares. When your max addition to the portfolio in any year is £5k including the Government top up, that is going to be a very expensive way of investing. Oh and no fractional shares so no opportunity to diversify your portfolio either.
Obviously it depends on a persons finances and if they can dedicate money to it without withdrawing, but for a savings account before buying a house a LISA has incredible returns over 5 to 10 years even without interest. Investing monthly up to 4K per year (333.33 Per month) and ending up with 25K after 5 years is a 9% annual return on investment tax free. 10 years that's about 4.5% returns with no tax. That's ignoring any interest the account makes on top of the bonus.
@@SashaYanshin Totally agree that was more explaining an option for Daniel Rance, you don't even need to invest for a good return short term like you said!
@@SashaYanshin I see your point. But I think I’ll just be making 1 deposit a year into into a diversified etf like ftse global all cap. To minimise the fee. Thanks for you input. Your doing the good work. Keep it up man
They don't offer the opportunity to invest in actual stocks - only proprietary Vanguard funds and ETFs and I like my ISA to have more than just the S&P500 sitting in it so that's why I don't use it for that but for passive investors it can be a decent option although things like their S&P500 funds are actually cheaper if you buy them on a platform without an annual fee.
Thanks for an informative video. Quick question: Why is the Lisa such a bad option compared to the S&S isa? I mean Even if I'm not a first time buyer and I'm not going to access the S&S until I'm retiring anyway, the Lisa's 25% bonus gives it a favourable return, despite its limited flexibility compared to the S&S isa? Right? Or am I missing something?
25% seems great but then you're only earning 0.2% a year on the total. A stocks and shares isa will likely do 7-10% a year, so after 3 years you're even, then from then on your gain more, plus, compound interest means you earn interest on the Interest. I hope this helps
A question for the S&S ISA relating to the £20,000 allowance: say I have a T212 S&S ISA and contribute £10,000 in the 2021/2022 tax year. When the next tax year arrives in 2022/2023, does that ISA still only have £10,000 left? Or does it reset and I can contribute £20,000 again?
My understanding is that you can't get benefit from BOTH a Help To Buy AND a LISA - if you already have a Help To Buy, you can't use both but I'm just a random guy on the internet so do your own checks :)
I came to the 212 party late and am unable to open an account yet, however quick question on the ISA account with 212 is it true that you can open an account in different currency, if that is the case can you open it in $ and not pay the forex fee and have that in the ISA account, or the fact that it is ISA it has to be in your local currency?
I think there might be a way of doing it when you first open the account (I don't actually recall selecting the currency but it was a while ago so may well have been in there) but the vast majority of the customers already on the platform would presumably have just kept it in GBP as there was no reason not to. There is no way to switch this currency after you have created the account and you are not allowed to have more than 1 so there's the catch.
Is it possible to contribute to both a LISA and a Help to Buy ISA in the same tax year even if they combine for less than 20K? I understand help to buy is no longer available but is still active to people who opened one before it closed.
I think it is perfectly ok because they are different classes of ISA BUT you will only be able to use the special benefit of one of them when buying a house and not both.
Hey Sasha, great video. If you had the option to maximise your ISA allowance for the year. Which of the following would you do. 1. Put £16k into a stocks and shares ISA (invest in S&P & FTSE ETF) and Pay the remaining £4k into a Lifetime stocks and shares ISA (to grab bonus). OR 2. Put all the £20k ISA allowance into a stocks and shares ISA (invest in S&P & FTSE ETF)? Long-term investor. Won't be able to access LifeTime ISA for 20 years. Using it for retirement. Just wanted your thoughts. Love your work!
@@isujith Ah ok. Didn't get what you were talking about the first time. My view is that if someone is looking to buy a house relatively soon - e.g. next 2-3 years that fits in the programme, a guaranteed 25% bonus is pretty neat even if the returns after that suck so if I was in that spot, I'd use it.
Forgot the "Under The Mattress Option"!
YOU CAN SET UP A STOCKS & SHARES ISA AND A SIPP ACCOUNT WITH FREETRADE
GET A FREE SHARE WORTH UP TO £200 WHILE YOU'RE AT IT
magic.freetrade.io/join/sasha-yanshin
You need to sign up and make any deposit to get the free share. I will get a free share as well.
Which of the providers would say offered the best stocks & shares Lifetime ISA?
@@benojika1851 If I am honest I am not sure - I don't have one and they very much look very similar to me overall. Different people will probably have different preferences based on specifics.
Sasha can you do a video on wheres best to hold your emergency fund - I've been looking at premium bonds as they seem to pay the most for accessible cash. Your thoughts would be interesting
Check my video on my investing strategy - I talk a bit about my emergency fund approach in there :) ruclips.net/video/n0FNxXNjyvg/видео.html
LISA is brilliant for first time buyers. Both my partner and I opened Help to Buy ISAs the day they opened then transferred them to LISAs when they opened. Over about 4 years we made over 8/9k as we were allowed to claim 25% on everything we had already saved in the H2B.
Yeah - definitely one that more young people need to know about!
It may be worth checking but I believe that you can only use funds from one of your LISA if you are buying a property jointly.
@@stephenbrown8415 Nope. As long as both are first time buyers, both LISAs can be used. Quote from the Gov page linked below: "If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too."
Check here for details: www.gov.uk/lifetime-isa
House prices prob went up 30k+ so you’re still losing, just by more.
LISAs are great but it's a shame they have such low interest (esp these days) and the restrictions are a bit much. I'm happy they lifted the restrictions for this tax year so I could test it out to see if I wanted to use it for buying a house or retirement. But right now I think I'll be sticking to a SIPP and S&S ISA.
What were the lifted restrictions? Not sure I'm following!
@@SashaYanshin Normally with a LISA if you take money out you lose 25% because of the bonus but this means you actually lose some of the money you put in. With the pandemic they have lifted this restriction so you only lose 20% thus you get back what you put in if you need the money and decide to withdraw it. Really it makes more sense this way anyway, so hopefully they keep it.
@@SashaYanshin exactly what TheLittleThings said. There used to be a 25% penalty to withdraw if you weren't buying a home or in retirement. That meant you lost some of your intial deposits and the bonus. They've reduced it to 20% until the 5th April 2021 which means you get all your initial deposits back and any interest gained but minus the government bonus.
@@AbiChow Ah yeah. Both seem almost the same to me as with the penalty in place, I wouldn't put money into a LISA if I did want to withdraw it but fair point.
You do realise there are stocks and shares lifetime ISA’s right?
Firstly, immense thanks for your exceptionally informative series: so loaded with second-to-second superb insights!
I've been wondering about the strategy of 'Maxing-out' on ISAs - whether it would be just as well do so, year after year, as to buy long-term shares on a typical basis?
Noted: there's "no downside" and beyond ISA's there's currently a 12k allowance for capital gains... so are there any straightforward 'upsides' when playing long-term and having to push towards putting 20k away?
Are you asking whether there is an upside to investing in a regular investing account over an ISA? Not really when it comes to numbers - some benefits include a wider selection of markets and stocks and additional features (like being able to hold $ in your account with providers that allow it) but that's about it.
@@SashaYanshin Thanks - ISAs do seem a simple form of passive investment.
Had to switch up to the shirt for this one
Thought I'd go for it, but the glare was too much so switched out after!
Thank you. I keep hearing about the American and British and European governments printing silly money and flooding the economy with it. This will lead to inflation and so our savings will depreciate in value. Many folks are predicting a subsequent economic crash sometime in the near future as all the debt world leaders/banks have accrued is unsustainable. Britain is 1.3 trillion pounds in debt! My question is, if there is an economic crash, how can we prepare?
I don't prepare for these things and I personally think some of the thinking around the total amounts of debt are not taking into consideration the sort of mechanisms governments can employ over time to manage them so I am not immediately concerned on that part.
Lol this came true, well done
Yes yes Mr Sasha is looking smart latley 😎🔥😂
The glare from that shirt is way too much. We're changing for the next video!
@@SashaYanshin yea agreed maybe a white one would be better!
@@BrotherMohamedAli Would be even brighter. My lighting setup means my face really needs to be the most reflective thing facing the camera :)
I currently pay everything over 40% threshold into my pension, then max out my LISA so in effect paying less than 20% tax, the remainder goes in to S&S ISA. Is there a way to be more tax efficient in the long run?
So you don't think you should try and add the max to the LISA to get the gov contribution? I'm in my early 40s and have a home, so I don't need it for that. I do have a pension now and am in the higher tax bracket, so feel I should make use of that extra 20% tax break? I also have some money in the S&P 500. Unsure what I should be putting most into at this point.
Could you please do a video on Vanguard if you ever worked with that platform. (ideally, if you could compare it to 212)
Very different things - I do occasionally talk about it in some videos but Vanguard is just a place to invest in funds and even if you want to invest in ETFs, Vanguard is actually more expensive than some other platforms for investing in things like the Vanguard S&P 500 ETFs because of the management fee...
Will definitely make some content on this as people do keep asking though!
@@SashaYanshin that would be great as I am thinking of opening my first Stocks & Shares ISA with Vanguard and also a Junior one for my son.
I'm 19 and I'm paying £100 into my Lisa every month which is invested in different ETFs. I don't know if it's a good because of my age but should be enough for a downpayment on a house (especially if the 5% downpayments are coming back)
Have you not thought about a help to buy ISA? You get 25% (40% if in london) if you use the money saved to buy a house (example: save 12k get 3k when you buy a home)
@@jacobconcannon4677 I haven't got one as I hadn't done any investing art be time the applications closed for them so I'm stuck with a Lisa instaid I guess🙄
@@jacobconcannon4677 they’ve stopped that now and the LISA is much better than the help to buy anyways
@@paulhayes7972 the LISA is much better anyways
If somebody plans to buy within a short timeframe (but over 12 months), it's hard to argue with a 25% bump upfront that the LISA gives!
I am 19 and am thinking about starting my pension. I already have a LISA and an ISA. However if I use my LISA as my pension why would this not be better than a pension. I get 25% return guaranteed along with any growth on my investments. Yes I miss out on a 3% employee contribution and have to pay income tax on this amount but like you said all my gains are tax free unlike a pension which is only tax free on the first 25%.
You have a good point in some respects, however with pension you can draw first 25% of the accumulated pot completely tax free, also one has to also assume that you will also be able to draw approx 12k pa tax free, ie the current rate at which income tax would start. This would mean it works out better for moat tax payers (especially those higher rate tax payers getting a 40% releif rather than the 25 theyd get at inception on the isa). Where this all flips around is that at some point you will hit taxation on the pension, and once youve got a pension big enough to trigger that, then i would personally say it would have been beneficial to utilise the LISA allowance in a stocks and shares isa in collaboration with paying into pension, as when you eventually come to draw down you'll get the benefits of both. Its very complicated to give exact answers on this stuff.
Let's say £100 is 3% of your monthly income.
If you contribute £100 into a stocks and shares LISA, you get a £25 topup,which is a 25% topup, plus any gains from what the LISA is invested in.
If you contribute £100 into a pension, you get £25 topped up in tax relief, plus £100 matched contribution from your employer. You're getting a 125% topup with a pension, plus any gains from what the pensions are invested in. And in most cases, this difference is big enough that after many years of compounding growth, you have more money left over EVEN AFTER the taxes you'd pay when taking pensions out.
Love these videos - thank you 😊
Thanks!
I love the LISA, even if the interest rate is 0%. But now I think about how it works, it’s essentially just a tax-back service with extra steps 😂
Yep. You can get a little tax back when buying your first house :)
I look at it as 25% interest even though I know it’s not 😂
1. Have opened one ISA account in HSBC ( LOY_ISA_Adv) ( In OCT 2023) and deposited 20000.00 GBP and withdraw 5000.00 GBP in March 2024 .
2. I opened one more Cash ISA in NatWest in March 2023 and deposited 20000.00 GBP
3. Have opened in March 2024 one more ISA account ( march 2024) and deposited 20000.00 GBP and withdraw all amount in one day in Halifax .
Here my question is can i have any tax issues or penalties from HMRC as i have two ISA accounts with 20000.00 GBP amount in each account ?
Requesting for your kind advice
You can only put £20,000 in one tax year. You could get a penalty because you put in £40,000.
I agree that most LISA providers do offer high fees, but EQi offers a flat 0.2% fee, and allows you to invest in low cost funds which include vanguard funds. This to me seems like a better option than a SIPP for a basic rate taxpayer, as you're effectively reclaiming all of your tax (giving 25% is the same as not taxing 20% in the fist place). If you put your money into a SIPP you have to pay tax on most of your cash when you withdraw it in years to come, assuming you'll be withdrawing more than the tax free allowance. Interested in your thoughts?
They sure shout from the rooftops about their "Cheapest in the UK" 0.2% annual fee, but hide the £10.99 commission on all share trades (buying AND selling) and £9.99 on ETFs. Even the small selection of funds (which have very poor optics) charge £10.99 to sell, although they proudly print a big £0 for buying to make it look cheaper than it is.
I am generally not a fan of a platform where right upfront the intention is to hide the real pricing and deceive (e.g. zero mention of these fees on the main LISA page) so that's a load of thumbs down from me.
@@SashaYanshin I do agree they could be more open about the pricing, although the pricing structure wasn't so opaque and confusing that it raised a red flag for me.
I actually was about to fall foul of the £9.99 ETF commission, but I was very prominently told just prior to the point of purchase that I would be charged. This meant I could go for the vanguard S&P500 fund as opposed to the ETF. If you take all your money out in one go or in a few large chunks at 60, it should attract a negligible cost (?)... at least this is what I think, but I'm very new to this 😂.
Perhaps not paying attention to the potential ethical red flag you point out, may well come back and haunt me.
When you say poor optics- do you mean the visual representation of the data or does it have another meaning?
I'm so long term that I see my ISA and Pension as equal investing tools. I'm 25 and very bullish on my pension, currently putting in 47% of my salary via salary sacrifice. I plan to FIRE as soon as I hit 57 or years before that in anticipation that I know I'll get a hefty lump sum to pay off every debt including home.
Good luck with it - be careful not to breach the Lifetime Allowance of whatever level it may be in 32 years' time or you'll be paying most of your money over the threshold in tax - if you're putting in a lot early, there is every chance of hitting it even if you retire early.
@@SashaYanshin yep. All understood. I plan to reduce contributions later on in life in anticipation that it will be hit!
Good breakdown, especially since I am looking at stuff like this at present.
What are your thoughts on using a part of your savings (in my case aiming for retirement) to invest in crypto.
I obviously know it is higher risk for higher reward, but just trying to find out what you think
What makes you think LISA’s have low returns & high fees? Hargreaves Lansdown’s LISA fees are no different than for a S&S ISA and returns governed by your investments which is your choice....
Because the max you can put in is only £5k. You will then pay a 0.45% annual fee (£22.50) plus £11.95 per trade. So to invest in 10 companies for example (not particularly diversified but partly because they don’t do fractional shares anyway), you’re paying £120 to buy and another £120 to then sell. So say you buy a house in 12 months’ time, you have spent over £260 on fees alone - over 5%. And if you contribute less than £5k per year, the % fees are higher.
Charging that amount is insane. If you make ANY additional trades during the year, you are pushing 10% on costs...
But those trading charges don’t apply when purchasing funds rather than individual stocks no? For example Legal & General US Index’s net ongoing charge is 0.06% with an initial charge of 0.00%.
@@kennybother8583 Sure - but that is the exact point - in a Stocks & Shares LISA you can only invest in proprietary funds or ETFs at best and there is no real way to buy into actual stocks.
Yeah - an S&P500 equivalent ETF is good and is actually very good for the passive investor.
Also - I just double checked to confirm my bad memory. ETFs also get charged £11.95 trade fees on the HL LISA based on their website & there's the additional reinvestment charges on top. So if you are contributing in anything other than 1 lump sum per year, the fees will still stack up on what is a small portfolio.
Great video! For amalgamating previous workplace pensions, do you see any downsides to bringing these into a SIPP? Still have my current workplace pension ongoing. Also the lifetime pension limit…stupid question but that’s across all pensions right? :)
Yep - the limit is across all private pensions - would be a very easy way to avoid it otherwise!
I have moved all of mine into a SIPP BUT there are definitely downsides as well.
1. All your eggs are in one basket. Should something happen with the company - that may be a higher risk (although there are a lot of protections on how your money/assets are held)
2. SIPP pensions may have a higher risk and higher volatility - especially if you directly invest in stocks & shares. That is something that people need to be very aware of.
3. SIPP pensions may require more active management than traditional options that many often do a set and forget on.
There's probably a load of others too - just 3 off the top of my head.
@@SashaYanshin Thanks! I personally prefer the idea of having more of these invested in stocks & shares at my age even though there is potential risk. The active management is certainly a bit of a downside but checking on my investments a handle of times a year I feel is worth it. :)
If i'm on roughly 30k a year what sort of pension contribution should i be paying? I currently pay 5% and my employer 8% but i can change my own personal contribution. I am 52 already have 24 years in a defined benefit pension. Now i am in a defined contribution pension as company could not afford to continue with defined benefit scheme.
It all depends on personal choice, as well as the 5%, do you invest any more? Is there anyway you can cut spending and save/invest more?
Remember that you need to figure out what the value of your defined benefit pension will be and how that impacts your proximity to the Lifetime Allowance - those pensions can have much higher valuations than defined contribution.
As you get closer to retirement (especially if you're planning to do it early), contributing more begins making a whole lot more sense subject to not going over that limit.
so AJ Bell says "You should carefully weigh up whether you want to save into a Lifetime ISA instead of enrolling in a workplace pension scheme as this would mean you’d lose the benefit of employer contributions." - as currently I am enrolled in a company pension scheme, does that mean that if a open a lifetime ISA to buy my first home I will lose pensions benefits from my workplace?? thanks in advance for a response
No, you wouldn't. That statement is a little misleading - the two are completely separate things. Sure - if you STOP pension contributions and switch to using the LISA only this would apply. But getting a LISA has no direct impact on what you do with your pension or what happens with it - the two are entirely separate things.
Hello. Quick of topic question please.
I'm self employed and i pay tax with every payslip. Does that tax include pensions aswell? And if yes will i be able to take all my pension money at once when i retire? Thanks 🤜🤛
There's a difference between state pension which is simply a form of welfare and private pension. If you don't have a private pension provider set up and don't specifically deduct money to it, then the answer is no - you don't have payments going towards your pension. The Government does not take separate payments towards your state pension.
Hey I agree most LISA offer poor returns. But I opened one with aj bell that allows investment in stocks and shares. For far greater returns
Which walks right into my point on fees with £9.95 charges per trade on shares. When your max addition to the portfolio in any year is £5k including the Government top up, that is going to be a very expensive way of investing. Oh and no fractional shares so no opportunity to diversify your portfolio either.
Obviously it depends on a persons finances and if they can dedicate money to it without withdrawing, but for a savings account before buying a house a LISA has incredible returns over 5 to 10 years even without interest. Investing monthly up to 4K per year (333.33 Per month) and ending up with 25K after 5 years is a 9% annual return on investment tax free. 10 years that's about 4.5% returns with no tax. That's ignoring any interest the account makes on top of the bonus.
@@8G00SE8 That's exactly what I said - for those buying their first property within LISA rules, it's an obviously awesome choice.
@@SashaYanshin Totally agree that was more explaining an option for Daniel Rance, you don't even need to invest for a good return short term like you said!
@@SashaYanshin I see your point. But I think I’ll just be making 1 deposit a year into into a diversified etf like ftse global all cap. To minimise the fee. Thanks for you input. Your doing the good work. Keep it up man
Where's your
blue t-shirt!!!
In the next video.
What's your opinion on using Vanguard for Stocks and Shares ISA compared to the ones mentioned in your video?
They don't offer the opportunity to invest in actual stocks - only proprietary Vanguard funds and ETFs and I like my ISA to have more than just the S&P500 sitting in it so that's why I don't use it for that but for passive investors it can be a decent option although things like their S&P500 funds are actually cheaper if you buy them on a platform without an annual fee.
@@SashaYanshin really appreciate your response thanks
Thanks for an informative video. Quick question:
Why is the Lisa such a bad option compared to the S&S isa?
I mean Even if I'm not a first time buyer and I'm not going to access the S&S until I'm retiring anyway, the Lisa's 25% bonus gives it a favourable return, despite its limited flexibility compared to the S&S isa? Right? Or am I missing something?
25% seems great but then you're only earning 0.2% a year on the total. A stocks and shares isa will likely do 7-10% a year, so after 3 years you're even, then from then on your gain more, plus, compound interest means you earn interest on the Interest. I hope this helps
A question for the S&S ISA relating to the £20,000 allowance: say I have a T212 S&S ISA and contribute £10,000 in the 2021/2022 tax year. When the next tax year arrives in 2022/2023, does that ISA still only have £10,000 left? Or does it reset and I can contribute £20,000 again?
it resets. You can contribute up to £20,000 per financial year, not in total :)
Opinions on Help To Buy ISA to LISA transfer? I currently get 1.75% on my HTB with HSBC.
My understanding is that you can't get benefit from BOTH a Help To Buy AND a LISA - if you already have a Help To Buy, you can't use both but I'm just a random guy on the internet so do your own checks :)
I came to the 212 party late and am unable to open an account yet, however quick question on the ISA account with 212 is it true that you can open an account in different currency, if that is the case can you open it in $ and not pay the forex fee and have that in the ISA account, or the fact that it is ISA it has to be in your local currency?
I think there might be a way of doing it when you first open the account (I don't actually recall selecting the currency but it was a while ago so may well have been in there) but the vast majority of the customers already on the platform would presumably have just kept it in GBP as there was no reason not to.
There is no way to switch this currency after you have created the account and you are not allowed to have more than 1 so there's the catch.
I’m new to all this, can I open a stocks and shares ISA and a LISA?
Is it possible to contribute to both a LISA and a Help to Buy ISA in the same tax year even if they combine for less than 20K? I understand help to buy is no longer available but is still active to people who opened one before it closed.
I think it is perfectly ok because they are different classes of ISA BUT you will only be able to use the special benefit of one of them when buying a house and not both.
@@SashaYanshin that's where I'm not entirely sure, since I couldn't find any explicit information on gov's websites. Aren't they both cash ISAs?
@@JoSantino147 Nope - a LISA is a separate ISA class that can operate like a cash ISA OR a Stocks & Shares ISA, but is still separate...
Hey Sasha, great video. If you had the option to maximise your ISA allowance for the year. Which of the following would you do.
1. Put £16k into a stocks and shares ISA (invest in S&P & FTSE ETF) and Pay the remaining £4k into a Lifetime stocks and shares ISA (to grab bonus).
OR
2. Put all the £20k ISA allowance into a stocks and shares ISA (invest in S&P & FTSE ETF)?
Long-term investor. Won't be able to access LifeTime ISA for 20 years. Using it for retirement.
Just wanted your thoughts. Love your work!
I miss when Sasha made normal content
wat abt opening nutmeg lisa as a pension in addition to workplace pension.
What about it?
is it worth ?🤔 as u get 1000 + annual return from stock n shares. thinking whether to take as pension saving in addition to workplace pension
@@isujith What do you mean by 1000+ annual return? Their returns are definitely not all that dandy...
@@SashaYanshin
1000 is gov bonus plus annual return on the performance of s&s
@@isujith Ah ok. Didn't get what you were talking about the first time. My view is that if someone is looking to buy a house relatively soon - e.g. next 2-3 years that fits in the programme, a guaranteed 25% bonus is pretty neat even if the returns after that suck so if I was in that spot, I'd use it.
I’m not a financial adviser.... but I’m going to give you financial advice
Literally the opposite of what I actually do in the video.
Great info thanks
Thanks Kevin! :)
nice shirt 🤣
That glare! Had to switch before the 2nd video came out!
Bang it all into Bitcoin. Unless you like small gains.
hahaha. ALL ON RED!