17 Apr Apprenticeship Blog Week Four – The benefits of Lifetime ISA’s
Welcome back for blog numero four everyone, I hope your still with me. I’ve spent this week doing quite a lot of different things but most interestingly I have opened up my first investment product. Now I know what you’re thinking, “God he’s only been there 5 minutes and he thinks he’s gonna be the next wolf of Wall Street”. This isn’t the case. I do not look like Leonardo Di Caprio. However, I’d be lying if I said that I wasn’t excited about the bonuses that come with my newly opened Lifetime ISA. As I will be receiving a lovely 25% bonus on any contributions I make each tax year until I decide to either put a deposit down for a house, or turn 50. I am really really really hoping the house option comes first! More for my parent’s sake then my own. I don’t think my mum will appreciate cleaning up after me for another 31 years! But thinking about it, I don’t think I would be too keen on the idea of cleaning up after me either. Maybe I’ll just have to pay my parents rent……and housekeeping charges. I’m sure this will be pocket change for me in the near future anyway, I’m gonna be an investment tycoon in no time after opening my lifetime ISA. I just need to put some money into it…….that reminds me, I still haven’t set up my direct debit.
What I’ve learnt
I spent a reasonable amount of time looking around various sites when judging whether or not the Lifetime ISA was worth investing in for me personally. Which made me realise a couple of things I could’ve probably guessed already, don’t believe everything you see on the internet and some knowledge is dangerous. After doing some personal research on investing I can see how easy it would be for individuals to be misled into making poorly informed decisions, there is such easy access to inaccurate material online. I found this to be a worrying thought, especially since peoples personal finances make up such an important part of their life. It’s what supports your livelihood throughout your years and has also been shown to have a massive impact on an individual’s stress (so you want it to be done properly!). So the major things I’ve learnt from this experience would be to not believe everything you read, do not rush into an uninformed decision and if you want to be really safe, go to a professional to get advice. I’ve heard Sam’s pretty good.
The full state pension will be worth approximately £8,767.20 in 2019/20. Which If you received the full benefits of a lifetime ISA by contributing £4,000 every year from 18-50 you would receive a total bonus worth £33,000!
Office Politics – Use the money from your Lifetime ISA for a house deposit? Or use it for retirement saving?
This question obviously varies to each individual. In my case though, I feel the answer is very clear. Unless you are lucky enough to have the sufficient funds to buy a house with relative ease, there is no reason why this money shouldn’t be used towards your first home. It would presumably take a lot of financial pressure off you that comes with purchasing a home, depending on what you put into the ISA. But the main winning factor is that a pension is a much better instrument to support you for later life, a pension is also a requirement from employers now so there is no reason for you not to be saving into a pension. This means there would be no need to save for retirement in the lifetime ISA also. So go ahead, treat yourself to your first ever mortgage……..I’ve heard there so much fun.