Ultimate guide to maximising your income: The LISA (Lifetime ISA)

What is LISA?

The LISA is known as the Lifetime ISA. You may have heard of other ISA’s such as Cash ISA, Stocks and Shares ISA etc. All the ISA (individual savings account) indicates is that any money earned is tax-free (usually up to a limit).

Drawbacks

Sounds too good to be true? What’s the catch?

  • buying your first home
  • aged 60 or over
  • terminally ill, with less than 12 months to live

Example

I’ve invested £4,000 into my LISA, and obtain my bonus of £1,000, bringing a total of £5,000. Assuming no growth, if I choose to withdraw before I meet the 3 criteria I would lose £5,000 * 0.25 = £1250.

So should I get a LISA?

Yes, if you plan to:

  • buy your first home in the future
  • only withdraw once you are 60

Okay I’m sold, so how do I open one?

There are 2 types of LISAs:

  • Cash LISA — A savings account with a fixed rate (e.g. 1.1% every year)
  • Stocks & Shares LISA — Investments in the stock market (can have better returns but the value might go down)

My own LISA — MoneyBox

Okay, this sounds great, but can I see a real-life example of how a real LISA would look like?

  • UK Tax Year 2019–20 £4,000
  • UK Tax Year 2020–2021 £3,600

Complete breakdown

Weekly deposits

Portfolio of shares

Thanks for reading!

If you would like to get started with a LISA I highly recommend MoneyBox. They’ve had great returns for me overall

  • £1,850 in LISA bonus (close to 2 years worth of bonus)
  • £1,216.31 in investment gains
  • -£29.35 in fees

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