ISA season: life begins at £4k!

The Lifetime ISA allows accountholders to contribute – up to £4,000 each year – until their half-century, either as cash or stocks and shares.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Snowing on Jubilee Gardens in London at dusk

Image source: Getty Images

My next milestone birthday is fast approaching, as my wife keeps reminding me.

The big 4-0. When life begins, so they say. Or is it impending doom? 

Maybe – if I hadn’t opened a Lifetime ISA by then.

There aren’t many age restrictions on savings products, at least on the upper range. But with a LISA, the account must be opened between 18 and 39 years old.

Like a financial Logan’s Run, there’s a cut-off point at a certain age. In this case 40.

Or is it 50? The Lifetime ISA allows accountholders to contribute – up to £4,000 each year – until their half-century, either as cash or stocks and shares.

Of course, the real benefit to the LISA is the 25% bonus added to your savings courtesy of the government. So if you’re lucky enough to afford to save £4k each year, that’s a free £1,000 annually!

Once the big 5-0 is reached, you’re unable to pay in to or withdraw from your savings for a decade without incurring a hefty fee – with two exceptions – though it will still earn interest or investment returns. 

One of those caveats is if the accountholder is buying their first home; I’m in a fortunate position to have done that in recent years, so my Lifetime ISA savings will go towards our retirement.

I estimate that I’ll have saved around £75,000 by the time I’m 50, with £15k of that kindly contributed by the government. With whatever interest is added, that’s a substantial start to retirement.

As I’ll keep reminding my wife!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »