Lifetime ISA

I’m thinking about my Lifetime stocks and shares ISA. It’s currently sat with Nutmeg, but I’m wondering if there’s a better provider - or indeed if Dozens has any plans for this area.

(I’m a bit dissatisfied with Nutmeg’s fees - and their behaviour when I tried to transfer another ISA out).

Any thoughts / advice?

Also on my to-do list…

Are you saving for a first home, or using it instead of / supplementing a pension?

My recollection is that (assuming mostly funds in stocks/shares here?) AJ Bell likely to be cheaper than HL.

AJ Bell Youinvest (£3.50/month cap for shares, ETF and IT) and EQi (£10/quarter) are the cheapest S&S LISA platforms on the market that I’m aware of.

I’m using money box, but not S&S, had no issues so far, have a S&S Pension with them, again good going asfaic but only a limited choice of 3 funds but I was happy with that, the ethical one I chose is doing well.

at the moment we are not working on offering a LISA

this may well change in the medium to longer term as we are still keen on helping people afford to buy a property or save for retirement, but it is not something we can do immediately

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  1. Pensions are usually long-term investments, therefore all pensions types involve some investments. There’s no such thing as a cash pension, nor S&S pension. There’s different types of personal pension, such as Stakeholder Pension and Self Invested Personal Pension (SIPP). I didn’t look into the details, but Money Box Pension sounds like a SIPP to me.

  2. That’s not a limited choice of 3 funds, but rather a limited choices of 3 portfolios, for people with different risk profiles.

  3. Money Box Pension’s fees are pretty high. It charges 0.45% on the first £100k, this is pretty expensive for a SIPP. You can get 0.15% from Vanguard (limited fund choices, free trading), or 0.25% from AJ Bell (wide rage of funds, but has trading commissions).

However, if you can’t tell the different between a portfolio and a fund, you really shouldn’t jump to Vanguard or AJ Bell. Because the chance of making a mistake is much higher if you use a non-hand-holding pension platform, and mistakes cost money too. For those who are inexperienced, you may want to look into cheap Stakeholder Pensions instead, as they provide default funds, and only allow you to invest in a limited number of funds that’s deemed suitable for average people.

Off-topic:
@robert I think this is an example of the ready-made portfolio investment management business model I was taking about. Their portfolios are available here. This is really novice friendly, because they can be made to feel just like savings account. Their lowest risk portfolio actually contains 40% cash and 40% bonds to make it feels even more like saving than investing.

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Thanks for the corrections in terminology, (they themselves use the term fund, presumably because your pension portfolio is invested in an underlying fund) it was more I was replying on the move in support of MoneyBox from a service point of view than anything else.

I hadn’t actually spotted the 0.45% fee when I signed up, they hi-lighted the fund fee so that will naturally be being added to the 0.45% (0.23% in my case)

But tbh i’m quite happy with it it’s only been going up in value and profit on growth exceeds the fees :slightly_smiling_face:

Honestly, I don’t want to see Dozens offering LISA at all, unless some changes are introduced to the LISA scheme to make it less complex, but then it’s not the same LISA any more, it will need a new name.

Quick quiz to tell you how complex is the product:

  1. Can you pay into a Cash LISA and a S&S LISA in the same tax year?
  2. Can you pay into a Cash LISA and a Cash ISA in the same tax year?
  3. If someone is above the age limit to open an account, can they transfer their existing LISA to a new provider?
  4. What’s the max amount you can pay into a LISA in each tax year?
  5. What’s max amount of Government bonus you can get in one calendar year?

Unless you have been following the LISA rules very closely, you probably will get about half of the answers wrong.

It’s an badly designed product, and I feel that the government may decide to scrape it one day, like the HTB ISA. There’s no reason for a startup company like Dozens to waste limited resource on a product without a clear future.

The investment world is full of jagon, and they do have very specific meanings. I think that Money Box is aimed at people without investment experiences, so they are trying to avoid use jagon in their client facing communications, therefore they call them “funds” instead of “portfolios”. But it’s always good to learn how the professionals would call them, because that helps you to open the gate to the whole world of possibilities.

Yes, they kept this in small prints. It actually took me a while to find it on their website. And you are correct, you should add the underlying fund fees to the 0.45%, so you are paying 0.68% fees in total.

That’s one way to look at it. Another way is how much of your profit is being eaten away by the fees.

Assuming that you are invested in the lowest risk portfolio, which I estimate to have about 3.5% average return. After the 0.68% fees, your actual return will be 2.82%. In another word, the fees is eating away nearly 20% of your returns.

Interesting, unless they are vastly misleading in their portfolio reporting, my fees are currently approx 2% of my investment gains but it could be I am looking at it another way.

In any regard, it’s a second source as I have a primary employer % of salary scheme, but it doesn’t pay out until quite late so I wanted something small I could use to top up my income if I decided to go part time before proper retirement age.

It’s a numbers game. There’s so many different ways they can present the fees to their customers, and they, and any other company, will certainly choose the one looks least bad.

It’s good to have a heathy pension pot, keep it up! :+1:

Ha, very true!

I agree it’s not a perfect product, but shelving government subsidy for those selling to first-time buyers would be catastrophically unpopular. So something like it will live on, and more than likely involve ISA wrapper.

It seems right up Dozens’ alley to me, since the whole idea of replacing HTB ISAs with LISA was in the hope people continue saving for retirement. Of course, in almost all cases, a pension is a more suitable product for retirement saving…

And if that replacement is a better product, then I don’t see why Dozens shouldn’t offer it.

The LISA as it is at the moment, is a complex product, requires financial commitments, may prevent you from accessing means tested benefits, in most cases beaten by a pension for retirement, and causes uncertainties for people planning to buy a property close to the 450k price cap or have a long time horizon.

The pension vs LISA and benefit trap are well known issues, there’s many websites explaining it in details. Let’s talk about the issues related to buying a property.

The 450k limit on property market price is fixed, doesn’t go up with inflation or house price, isn’t regional like the new HTB Equity Loan scheme’s price cap, and there’s no built-in mechanism to review this cap. Comparing to LISA, HTB Equity Loan scheme has set expiry date, and if the government wants to renew it, they will have the chance to review the caps and other terms.

Because of the fixed 450k price cap, LISA is going to become less and less usable for people seeking to buy in expensive areas, such as London, and soon the South East too. If anyone is saving their deposit in the LISA and planning to buy a property close to the 450k cap, they better hope the house price doesn’t rise too much before they buy. Or they may soon find out that their dream home had gone over the 450k cap, therefore their deposit is locked in the LISA till they reach 60 years old. What a disaster?

The government took the wrong way to help people save for a property and retirement. They could have kept the HTB ISA and spend the extra money on financial education instead. Restricting what people can do with their saved money is only going to put off people from saving. I’ve heard so many times that someone not saving into a LISA because they aren’t 100% sure that they will buy a property below 450k in the UK. They might want to move to a different country, or want to buy a property close to or exceeds the price cap, or just simply don’t have a plan yet.

As you said, instead of offering LISA, if Dozens really have the time, money and talent to develop a new financial product, why not let that be a pension?

Note: I’m not suggesting that Dozens should develop a new product at this stage. I’d rather see Dozens spending that effort on improving the existing products.

It will be interesting to see if the market changes much around 2027 and beyond. As the LISA was only introduced in April 2017, it will be when the very first people to open a LISA hit their 50s and can no longer pay in (presumably, a very small number of people).

Given the inheritance curve rises dramatically with each year you get older and picks up as people head towards 50, there will presumably be a wealthy segment who inherit and have maxed out pensions and/or want to spread the love among family members who only have small pension allowances.

I always thought that was why the LISA was locked from 50 anyway - otherwise, it would be a haven for far more heritees.

At that point, it may garner much more interest (no pun intended) from providers.