The Lifetime Isa (Lisa) market has expanded with the arrival of a new provider, OneFamily.
OneFamily has launched a stocks and shares version of the Lifetime Isa, joining providers including AJ Bell, Hargreaves Lansdown, and The Share Centre.
Skipton Building Society remains the only provider offering the cash version.
The OneFamily Lisa can be opened with £25 a month, or a £250 lump sum payment, and charges an annual 1% management fee. Customers can also transfer old Help to Buy Isas into this account.
The product is designed to help those saving for a home or towards retirement, with the government adding a 25% bonus on top of any deposits, up to a limit of £1,000 a year.
Investors can choose from two OneFamily investment funds, depending on the level of risk they are comfortable with, and can switch between the two at any time.
Nici Audhlam-Gardiner, managing director of Lifetime Isas at OneFamily, says: “We are delighted to be entering the Lifetime Isa market.
“Our Lifetime Isa provides much needed additional help for 18- to 39-year-olds, who, with the increase in the cost of living and stagnant wages, are finding it harder to save for their first home or for retirement.”
How do the fees compare?
AJ Bell, Foresters Friendly, Hargreaves Lansdown, Moneybox, Nutmeg, and The Share Centre are the major providers currently offering the stocks and shares Lisa.
The AJ Bell Lifetime Isa has an annual platform charge of 0.25%, plus additional fund charges. This compares with a 0.45% yearly charge at Hargreaves Lansdown on portfolios worth up to £250,000, plus additional fund charges also apply.
Moneybox charges £1 a month and 0.45% of the value of your investments per year.
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 again apply.
The Share Centre offers three funds for investors, depending on their level of risk. There are charges of between 1.69% and 1.82% 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.