My friends often ask “how to open an ISA” or “what is the difference between a SIPP and an ISA”, I will touch on the latter another day. But today, I wanted to do a quick video on how to open a LISA. These days it is ridiculously simple.
I will be doing some further analysis on whether you “should” open a lifetime ISA. But the below information is for those that haven’t yet and want to learn how. For my more advanced readers, there is more to come!
The lifetime ISA is a savings or investment account in which the government will pay you 25% On all deposits. The caveat of this is that you can only access this money if you’re buying your first home up to 450,000 pounds or if you are age 60. The idea behind this is to get young people to invest in their future and give them a helping hand on the property ladder to try and calm inequality and the widening wealth gap in the UK.
If you are looking to buy your first home in the next few years, I suggest there isn’t much downside to using a lifetime ISA. For example, when I purchased my first home in 2020, I used the lifetime ISA and found it easy to implement. Because I made some lucky investments of the £8000 I put into my lifetime later, I ended up with about £20k, with two grand of that coming from the government.
There are many different providers of lifetime ISAs depending on what you need. For example, if you’re looking to buy a house in the next two or three years, I suggest looking at cash ISAs or a stocks and shares ISA but heavily weighted towards bonds rather than individual or even ETF tracker funds. So, if you will buy in the next few years, the safest option is to leave that in a cash ISA.
However, because I’ve already bought my first property, and you’ll see this in the below video, I will use it to generate wealth for when I turn 60. I know I’ll need money when I’m 60. Regardless of how successful I am in other ventures, using the 25% increase on all my investments every year makes sense, potentially for the next 20 or 25.
Below you will find a video of me walking through the opening of a lifetime ISA; as you will see with Money Box, it is a very straightforward process. If you have any questions or concerns, please do feel free to contact me here or on YouTube, and I will do my best to help you.
I want to do a follow-up video and blog post on the differences between a self-invested pension plan and a Lifetime ISA. I think there are some intriguing calculations to determine the best course of action for your circumstance, and I look forward to exploring this in due course.
I hope you have enjoyed this video and this blog post, and let me know if there are any topics you’d like me to explore.