Hey guys, it's sasha, one of the hottest topics at the moment are lifetime isis, what's not to like about the government, giving you a 25 bonus upfront on your investments or savings. Well, the new financial year is just about to start in a few days and when you account for the fact that we have a long weekend because of easter coming up, you only have a few days left to open it. This side of the taxi or potentially open it as soon as the new financial year starts, you can deposit up to 4 000 pounds per year for a financial year into the lisa. The lighter myself and the government will then pay up to 1 000 pounds into that account on top of your deposit.

There are a few different rules and restrictions and some things that you specifically need to know that i'm not going to cover in this video, because i have an entire separate video, i'm going to link in the description below that explains lifetime. Ices in full detail so make sure you go and check that out after watching this one. What i will do, though, in this video is, i will go through the best lifetime ices available in the market, so that you can go and understand a bit more about them, a bit more about the pricing and what you might be able to get just a Brief disclaimer before we get any further, i am not a financial advisor. I can't provide financial advice to you and if you do need financial advice, please make sure you go and seek the help of a suitably qualified professional.

Now the surprising thing after doing a lot of research on this is how few providers of lifetime isis there are. I dug around a lot and there are very very few options. The more i looked, the more i was surprised by how few there were when i spent hours and hours researching this. I only found a total of 15 different lyso options, with two of them being limited to a very specific small number of customer segments.

So that's only 13 lifetime isis that are generally available to the public by 12 different providers. I might have missed some, but if i did the likelihood is that most customers will too, because it's going to be incredibly hard to find them. If i have make sure you go and point them out in the comments, so at least providers, there are three different types of lifetime: isis there's cash lifetime, isis, which basically work exactly the same as a savings account. There are managed investing lifetime isis and there are do-it-yourself investing licenses as well.

Let's start with the easiest: the cash lifetime isis, there are a few out there who are not trying too hard to attract new customers by paying incredibly low rates. Skipton building society stands out as being the probably the worst of the lot from what i found. They pay just not point one percent per year into elisa the three best ones from this category that i found are the nottingham building society, which pays not point. Eight percent money box, which has a cash isa as well as an investing asset, pays 0.85 and unity, mutual which pays 1.5 percent.

Just so you know the unity mutual lifetime. Isa is actually technically a stocks and shares lifetime isa, but it pays a fixed percentage return. So, as far as the customer concerned, it works in exactly the same way as a cash lifetime. Iso now you'll notice, with the rates these are basically roughly equivalent to the current rate of inflation.

So your money is not really growing. If you put your money with these, it's just being protected to maintain its value. However, the whole point here is that you get your 25 bonus from the government and then you use it to buy a house, and the rate of return is not really material, because here your money can't reduce in value, unlike with investments. So this is a pretty decent option for anyone wanting to buy a house.

I certainly wouldn't want to use one of these cash lifetime isis as a method of planning for my retirement, because they basically weren't growing my money between now and that point other than through that government bonus. Then we have some managed options. Two of them are really pretty bad. The foresters friendly society and one family charge huge, very expensive annual fees and give you returns about four to five percent which, in my opinion, doesn't make them particularly attractive.

The two better options out there are nutmeg and money box, money, box charges, 0.45, plus one pound per month and nutmeg charges not 0.45 for the fixed allocation, basic account or 0.75 for any of their more actively managed more specialist funds. However, from doing a bit of research looking at paseo's performance and looking at what they're invested in the number fix allocation seems to actually do better than the actually managed options it costs less. So if i had to choose between the two, i would probably go with that one: the nutmeg fix allocation if i was going for the managed investment option, and that brings me to the do it yourself options now you will know from watching my videos if you Have seen any of them, but i'm a big fan of these types of accounts. I love stocks and shares isis that allow you to invest directly in the market and i'm a big proponent of people educating themselves and getting more familiar with how the markets work and how they can use them to their advantage, but for lifetime isis it actually doesn't.

Quite work, the same, there's a big big issue, the three options available um for this type of investing are aj bell: hargreaves lands down and eqi and all charge pretty expensive fees, we're talking platform fees between 0.2 and 0.45, plus trade fees. Every single time you buy or sell uh different kinds of etfs stocks, funds etc as much as 12 pounds per time that you do it, and the issue is there's a lot of additional fees. Eqi is probably a bit worse than the other two on that that are very difficult to understand how they stack up, there's just like never ending one pound 50 for this and another fee for that and so on. But but let me i i spent some time and i cut through it.

The issue here is that if you only invest up to 4 000 pounds a year, which is the maximum, you can invest through a lifetime isa and even if that becomes 5 000 with the government bonus. That's still a relatively small amount, given those very expensive transaction fees. So, even if you picked the cheapest of these aj bell and decided to invest in actual shares, let me show you what would happen for simplicity, let's assume that you make one monthly deposit and you only buy shares in one company per month to reduce the cost. This is probably a bad idea because it gives you no diversification, but let's assume that over time you will diversify by investing in just 10 different companies which is kind of like still a bit tight, but anyway, let's make these assumptions for their benefit.

Now, let's assume that your shares do grow by eight percent and you make deposits of 416 pounds per month, including the government bonus, that's just rounded down from the maximum. You will then earn 457 pounds over the two-year period. Remember that if your investments have a bad year and only earn four percent or under four percent per year doing this, you will actually lose money because of the fees. Now, assuming you do get an eight percent return, though, if you decide to invest in two different companies each month, when you make investments, you will actually only earn 199 pounds, and if you decide to invest in more than two companies in every single month, you'll be Losing money, even with that relatively high return, so investing in stocks and shares and ets for lifetime isa seems like a pretty pointless exercise.

Why would you take the risk of your money going down and all the platform fees and all that for an expected return? That is barely higher than just putting your money into something that pays you 1.5, without any of the risk. Now, before anyone asks the returns here are lower than you might think, because i'm only looking at a fixed two-year window and i'm assuming that you're making deposits continuously through that period. I had to pick some standardized way of doing it, and these seem seem to make sense anything that i do would probably not apply to a lot of people. So i'm just comparing things and you need to go and do your own math and your own calculations to see if this kind of makes sense for your situation as well.

I also didn't account for any foreign exchange fees here which, with all of these providers, add another one percent charge. Every time you do. A trade both hargreaves lands down and ajo bell offer a regular investing option, which is a really interesting thing which actually changes the game. Now this one costs one pound 50 per month.

Instead of those very expensive share trading fees - and this lets - you invest in stocks and shares on a monthly basis via direct debit. Now, given that aj bell only cost 0.25 as the annual custody fee versus 0.45 with high grades lands down, i'm going to use them as the example. Although the difference is really minimal, doing the exact same calculation over a two year period gives me a 775 pounds. Return on the same eight percent per year, return, for example, if i put my money in s p 500, which is actually pretty good, if there was no fees at all, this number would be 844..

So, based on this, what would i choose? Well, if i was using the lisa for a deposit for my first house, which i think is the primary reason why anyone would probably use it, and i wanted to make sure the money did not drop in value, then i would use the unity mutual option to Collect my 1.5 percent per year after the government 25 cent bonus. If i had a fair bit more cash - and i didn't worry so much about the exact amount i had at the end - because i had substantially more than minimum deposit - and i was more happy with risk - then i'll probably consider going with aj bell and i would Make a monthly deposit by the direct debit into something like the s, p 500, to get much higher returns and save quite a few extra hundred pounds over the two year or three year period. But the truth is the relative differences here are actually really quite small, because when you're looking at those kind of windows, the differences are so small compared to the government 25 margin that you're really splitting hairs as the managed funds, typically underperform, the s p, 500 and Still lose value during a market downturn, i probably wouldn't go for the nutmeg or money box options over aj bell because, in my opinion, the aj bell 1.50 per month, investing in something like the s, p, 500 or a portfolio of robust companies. For me, i would feel much better in doing that, but everyone needs to go and make their own choices guys.

If you found this useful, please make sure you go and hit the like button feature algorithm, so that more people can go and watch this video. Thank you so much for watching. As always and i'll see you later, you.