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The ONE reason I’d pick a Stocks & Shares ISA over a Lifetime ISA or SIPP

In the UK, we have many fantastic investment accounts designed to help you boost your wealth. For example, there’s the Stocks & Shares ISA, which enables you to hold a broad range of assets and pay no tax on capital gains or income. Then, there’s the Lifetime ISA, which is also tax-free and comes with generous 25% bonus payments from the government. There’s also the Self-Invested Personal Pension (SIPP), a government-approved retirement account that comes with bonus payments in the form of tax relief.

While all of these investment vehicles can help you grow your savings, each has its own unique advantages and disadvantages. Here, I’ll explain the one huge advantage a Stocks & Shares ISA has over the other accounts.

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Stocks & Shares ISA flexibility

At face value, the Stocks & Shares ISA may seem inferior to other accounts. Yes, it’s tax-efficient, but doesn’t offer 25% bonus top-ups like the Lifetime ISA does. Nor does it come with tax relief like the SIPP does. However, the one big advantage that the Stocks & Shares ISA does offer is its flexibility. And that shouldn’t be ignored.

Access your money at any time

Indeed, the beauty is that you can access your money at any time. That makes it far more flexible than other accounts. For example, with a SIPP, you can’t access your money until you turn 55, and then you can only access 25% tax-free. Similarly, with a Lifetime ISA, you can’t touch this money until you either turn 60, or buy your first house. Yet with a Stocks & Shares ISA, you can access your capital whenever you want, which is a tremendous benefit. That kind of flexibility gives you powerful options in life.

Retire when you want

For example, let’s say you want to retire, or part-retire in your early 50s. With a Stocks & Shares ISA, that’s possible if you have enough capital in your account. Or, perhaps you need to access some of your savings to pay for your children’s school fees in your late 40s? With this particular ISA, you can withdraw money for that. Want to take a year off at 45 and travel the world? You’ll have access to your money at that age too. Build up enough capital, or a large enough passive income stream in your ISA and the world’s your oyster.

Ultimately, this flexibility is an extremely valuable benefit of the account. The fact that you can save and invest for the future and pay absolutely no tax on your capital gains or income yet still access your money whenever you want, is a very generous perk indeed. For this reason, the Stocks & Shares ISA is a brilliant vehicle for long-term saving and investing.

The best of both worlds

That said, the different investment accounts in the UK are not mutually exclusive. In other words, if you want flexibility and bonus top-ups, there’s nothing to stop you from opening up a Stocks & Shares ISA and a Lifetime ISA or a SIPP. Personally, I have money in all three. That way, I get the flexibility of the Stocks & Shares ISA, while I can also turbocharge my savings through the other accounts.

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Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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