I’d consider moving my Lifetime ISA to Freetrade (once the Android app is available) too. I’m also particularly interested in SRI ETFs being available.
Would definitely love to switch my Lifetime ISA over to Freetrade - would fit perfectly with the sentiment of long term investing here.
With Freetrade’s offering of choice and control, (rather than say, Nutmeg portfolio options or robo investing), if the LISA could be competitive with AJ, HL, etc, and beat their fees, think it would make Freetrade really standout in the market
Please offer this! I’ve been thinking of opening one since last year and would really love to have it with Freetrade.
Unless buying a house using it I don’t see any value in LISA’s, in most cases you’d be better off increasing your normal pension contributions.
I’d love to move my LISA from HL to Freetrade
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If anyone is thinking of opening a LISA with nutmeg let me know as I have a code that gets you no fees for 6 months
I would almost definitely love this code you speak of
It’s no secret that a LISA is an incredible asset for first-time home buyers and people wanting to increase their retirement savings.
Nutmeg offer a stocks and shares LISA, and so do H&L. In the case of Nutmeg, their core offering is incredibly limited (ETFs only) and in the case of H&L they are a legacy platform with high fees.
Perhaps Freetrade can swoop in and offer a best of both worlds scenario?
You point out HL’s high fees, but Nutmeg is even more expensive if you just buy funds which hold the same ETFs Nutmeg buys.
I don’t see that Nutmeg is more expensive than HL, they both charge 0.45%pa at their base with the ability to add extra costs through different platform offerings.
My point was that even though you could buy shares through HL, you’re charged £11.95 each way, which adds up.
If you actually want to use Nutmeg’s robo-advising, which is meant to be their main selling point as far as I can tell, the fee is 0.75%.
Even the 0.45% is still not cheaper than HL. And given its fixed allocation, you can buy an equivalent fund through HL which is free to do.
I think we’re at cross purposes here, firstly I never said Nutmeg is cheaper than HL, secondly I don’t believe you can fairly compare the cost of a service that isn’t available on the other platform and declare one as more expensive than the other
Also on the topic of fund purchase costs, it’s free on both platforms.
I really hope Freetrade offer this. The 25% bonus is great, and the restrictions would motivate me not to sell early.
Also, it would lock in the £3 per month ISA fees from so many accounts which, as an investor, I would be very pleased about.
I’d be keen to move mine over also
A lifetime isa done via the autopilot feature would be pretty great I think
I personally hope Freetrade don’t offer this. People see the 25% bonus and get starry eyed over it too much. For first time buyers who are sure their future house will be under £450k, a cash LISA is a good idea. Otherwise, not really.
An S&S LISA should be held for a long time, so using it for a house purchase would require you to begin saving really early and hope that your circumstances are still broadly similar in the future, so that you still want to buy a sub £450k house.
Using a S&S LISA is overly-romanticised as a tool for retirement planning, when in most cases, pension savings outweigh a LISA (and can even be accessed sooner!), surprisingly so in many cases, once you take into account tax and NI relief (if salary sacrifice, which most people should be on nowadays), making more use of your personal allowance in retirement (especially in the gap between accessing a pension and the state pension), the 25% tax free sum from your pension and no NI on withdrawl above state retirement age.
Sadly, the 25% bonus sounds a lot better than tax-relief to most people and LISA’s become overly romanticised, when people really would be better off contributing to a pension, which is why I think Freetrade should focus on a SIPP far before considering LISA’s.
There’s a niche bit of ground where a LISA is valuable in retirement (eg. you want to control a separate pot that is accessed at a different time and are unable to salary sacrifice in to anything other than your company-provided pot).
People should find out what account is best for them. Freetrade should offer the account to those that actually need it.
The solution, and this applies to the normal ISA as well, is that Freetrade should give clear guidance on what the best account for a given circumstance is. Ideally an interactive walkthrough in the app.
You make a great point, it does worry me when i hear people plan on buying a house in 5 years, say, and their deposit is a risky portfolio better suited for a longer horizon.
However, id counter that there’s no reason you can’t hold lower risk, short term investments in the S&S LISA. E.g. A government bond etf. This is a perfectly sensible approach, and more likely to beat cash. There is no better way to save for a house deposit than a S&S LISA in the UK in my opinion.
The case for a LISA as a retirement vehicle over a traditional pension is admittedly less compelling. The tax benefits, and employer contributions of a pension exceed a measly 25% bonus, even ifpensions are taxed on withdrawal. There are a few reasons why someone might still prefer a LISA. These are the first that come to mind:
if youre on a low income or are just extremely tax efficient, a LISA could be more attractive. Fpr instance, on a full time min wage salary, tax and NI contributions only amount to 9% of one’s salary. Freetrade’s mission is, atleast in part, to democratize investing after all.
You have exhausted the tax benefits of your pension (annual allowance, lifetime allowance, etc)
Pensions are effectively illiquid - you literally cant withdraw until the minimum retirement age (currently 55) . In a LISA you can liberate funds, albeit at a cost. Yes, you should be investing long term anyway, but its not unthinkable that someone could have a financial emergency, or similar.
Controversial maybe, but I believe there is a looming pension crisis in the UK. Life expacgancies are on the rise, defined benefit pensions are too expensive, and Uk borrowing as % of gdp is at a worrying high; I think it’s very likely the govt will increase austerity, taxation and/or raid pensions. ISAs funds are somewhat smaller, so a govt raid on them is less likely in my view. So I’d say it’s prudent to have at least some retirement funds In an isa; the forward-looking tax benefits of ISAs could outweigh that of pensions.
Ultimately, it is another potential source of revenue for freetrade. I’m actually just waiting for a LISA product before having freetrade as my go-to.
I understand the limitations of a LISA, but definitely want FT to offer this as a product and be able to transfer mine over (also gives FT another revenue stream!) - choice should be the key to personal finance decisions