The savings account with a 25% return that no one seems to know about
🔸 Plus: A personal finance influencer confesses she's actually terrible with money 🔸 Couples are increasingly signing prenups 🔸 Crypto company apologises for serving sushi off models' bodies 🔸
Hello! Here’s today’s 2-minute guide to demystifying money and making you richer
LISA: The savings account for young people with a 25% return.
A personal finance influencer with 350,000 followers confessed that, in reality, she was terrible with money.
Philip Hammond’s crypto company apologised for a dinner where sushi was served off the bodies of models.
The senior director of RBC Wealth Management commutes from North Wales to London.
Clothing company Shein sold $45 billion in gross merchandise value last year.
Abrdn, AJ Bell, Hargreaves Lansdown and Interactive Investor all want to end “stamp duty” on UK shares.
The studio behind Monopoly Go spent $500 million on marketing.
Couples tying the knot are increasingly looking at prenups.
Twitter/X has lost 73% of its value since Elon Musk bought it.
The markets, year to date
S&P 500: 5,254.35 ⬆️ 10.79%
FTSE 100: 7,952.62 ⬆️ 2.99%
Bitcoin: $69,448.70 ⬆️ 57.22%
GBP to USD: $1.43 ⬇️ 0.92%
GBP to EUR: €1.1696 ⬆️ 1.43%
A Lifetime ISA will give you a guaranteed 25% return on your cash
If you’re saving for a house, would you put your cash into a bank account with a 5% interest rate or one with a 25% guaranteed return?
The 25% one, obviously. You are not an idiot.
And yet hardly anyone does this! Only about three-quarters of a million Brits have opened a Lifetime Individual Savings Account. That’s surprising given that it’s basically a Free Money Scheme. It’s even tax-free.
Of course, the government gave it a boring and complicated name, all but ensuring that no one will pay attention to it.
But (almost) anyone can have one. If you’re young, serious about growing your wealth, and especially if you want to buy your own home, you should consider a LISA.
How Lifetime ISAs work
Anyone aged between 18 and 39 is eligible for a LISA. They’re intended to encourage young people to save to buy property.
The government will match 25% of any money you put into it. So if you save £4,000, the government will add £1,000 — free.
The free money bonus is paid monthly (so it compounds) until you hit age 50.
You can save up to a maximum of £4,000 per year, every year, into a LISA.
If you opened one at age 18, and saved the maximum amount every year, you could receive £33,000 — free — from the government by the time you hit 50.
Unlike a regular savings account, a LISA allows you to invest in stocks, bonds, or mutual funds. Over time, this has the potential to earn higher returns than a traditional savings account, helping your money grow faster.
All of the interest, dividends and any capital gains on your investments inside a LISA are tax-free.
So what’s the catch?
Yes, there are restrictions.
You can only withdraw money from a LISA without penalty if you are buying your first home in the UK. (The whole point is to incentivise young people to save for a house.)
The house you buy must cost less than £450,000. (This isn’t useful if you’re already rich, in other words.)
If you don’t buy a home, you can still withdraw it without penalty when you are 60, as if it were a pension.
You can also withdraw it without penalty if you are terminally ill. (Yikes.)
Let’s say disaster strikes
Let’s say you really, really need to withdraw your LISA money but aren’t buying a place to live or retiring.
You can still get your money back but you're charged a 25% penalty on the amount withdrawn. The government gets its 25% back, in other words.
That won’t leave you all-square, by the way. There are some tricky maths here. Here’s an example:
£100 + 25% = £125
But …
£125 - 25% = £93.75
So the early withdrawal penalty is a net loss of 6.25%. Which isn’t great. But if you’re really in an emergency it’s not a total disaster.
Your bank probably offers a LISA. And the usual online investment platforms offer them too (Hargreaves Lansdown, AJ Bell, Moneybox, Nutmeg, and so on).
More LISA research here
You can get more details on how LISAs work from MSE.
Which? has a good guide to the major LISA brands.
Forbes has a ranking of the “best” LISAs, based on fees.
The basics
And for dessert …
Lauren Cobello in one of her videos.
Personal finance influencer Lauren Cobello confessed to her 350,000 followers that, in reality, she was terrible with money and got into a ton of debt. “I was offering all this great advice, and behind the scenes I wasn’t heeding it. I was a single mom providing for four kids. Everything was falling apart and I felt trapped. I was sick of budgeting and talking about it, and I didn’t want to do another TikTok because I didn’t care any more,” she told The Guardian. We’re all human.
Former chancellor Philip Hammond’s crypto company apologised for hosting a dinner where sushi was served off the bodies of models wearing only swimwear. A source told the FT that it was “a lot of razzle dazzle … more performative art rather than anything seedy”.
The senior director at RBC Wealth Management commutes from North Wales to London. He gets up at 5am and it takes him three and a half hours.
How big is the clothing company Shein? Massive: It made a profit of $2 billion in 2023 $45 billion in gross merchandise value sold, the company reported.
Investment platforms Abrdn, AJ Bell, Hargreaves Lansdown and Interactive Investor all want the “stamp duty” tax on UK shares axed. Investors pay a 0.5% tax on UK-listed shares but the tax doesn’t apply to foreign shares.
The studio behind Monopoly Go, the mobile version of the board game, spent nearly $500 million on marketing. It was worth it: The game has been downloaded 100 million times and has made $2 billion.
Couples tying the knot are increasingly looking at prenups. Law firm Stewarts says enquiries about prenuptial agreements are up 51% this year, even though courts in England and Wales do not regard them as legally binding.
Fidelity’s Blue Chip Growth Fund cut the estimated value of its stake in Twitter/X in February, implying that the company has lost 73% of its value since Elon Musk took over.
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Photos: William Warby via Flickr; Lauren Cobello via YouTube; Images Money via Flickr.