AJ Bell launches Lifetime Isa

30 June 2017

AJ Bell Youinvest has become the latest provider to launch a stocks and shares version of the Lifetime Isa (Lisa).

The platform will allow investors to access funds or shares and users can pay in as little as £25 a month, or a lump sum up to the £4,000 annual Lisa limit.

Its Lifetime Isa has an annual platform charge of 0.25%, plus any additional fund or share charges.

Foresters Friendly, Hargreaves Lansdown, Nutmeg and The Share Centre are the other providers currently offering a stocks and shares Lisa.

However, Skipton Building Society remains the only firm offering a cash Lisa

Andy Bell, chief executive of AJ Bell, says: “The Lifetime Isa is a valuable new product that people can use to save for their future. It offers the same attractive government top up as 20% pension tax relief but crucially withdrawals will be free of tax if they are made for a house purchase or over age 60.

“Many people are still not saving enough, if anything, and the Lifetime Isa may be a catalyst for some younger people to start the investing journey. Almost half of our customers have told us they intend to use it as part of their long term savings so we are expecting it to be popular.”

How do the fees compare?

The AJ Bell Lifetime Isa has an annual platform charge of 0.25%, plus any additional fund charges.

This compares with Hargreaves Lansdown’s 0.45% yearly charge on portfolios worth up to £250,000.

Nutmeg investors face a 0.75% annual charge for fully managed portfolios of up to £100,000. It charges a lower 0.45% fee for fixed allocation portfolios.

Additional fund charges also apply to both these providers.

The Share Centre offers three funds for investors, depending on their level of risk. There are charges of between 1.92% and 2.01% on these, including its 0.75% annual management charge.

Foresters Friendly Society has a 1.25% annual management charge but you can only invest in its own fund.

How does the Lifetime Isa work?

The Lisa is designed to help first-time buyers and people starting to save for retirement. This means you can only open one if you are between 18 and 39 years old.

You can pay up to £4,000 into a Lisa each year until age 50, either in cash or to invest. Whatever you pay in will be topped up with a 25% bonus from the government, up to a maximum of £1,000. Any earnings will be tax free.

For those buying a home, the property must be valued at less than £450,000 and you must have had your Lisa open for at least 12 months.

If you’re saving for retirement, bear in mind you can’t access the cash until you’re 60 – unless you pay a hefty penalty.

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