The UK government has recently released a new type of ISA, the Lifetime ISA, to help first time buyers, such as myself.
My goal is to save £100,000.
My current savings are (all figures are rough):
- Help To Buy ISA: £6000 (monthly payments of £200, opened: ~2 years ago)
- Stocks & Share ISA: £3200 (initial investment: £3000, opened: ~1 year ago)
- Rainy day savings: £6000 (sitting in a current account, not accuring interest)
My monthly income is £2200. My monthly expenses are quite low at around £500. I am not putting anything into my pension yet, but this is a topic for another question.
Given the benefits of each ISA and my goal, what do you think I should do? Should I move the funds from the Help To Buy ISA into my Stocks And Shares ISA or into a Lifetime ISA?
EDIT: I have done some calculations and plotted the results. The following is assumed:
- Help To Buy ISA (variable) interest rate is 4% (what mine is at currently; EDIT: this has changed since I last checked, down to 1.5%)
- Lifetime ISA interest rate is 0.75% (best (and only) rate I found)
- Interest is applied annually for both ISAs
- Monthly contributions to Help To Buy ISA are £200 (the max allowed)
- Monthly contributions to Lifetime ISA's are £333.33, such that the annual contribution totals £4000; this is the max amount you will get the 25% bonus for.
- Starting balance for both is £1200 (this is based on the allowed starting balance for a Help To Buy ISA)
So it looks like if you follow the maximum restrictions for each ISA, a Lifetime ISA will help me reach my goal sooner, unless I am missing something.
It is to be noted that I could speed up the process even further if I place more than £333.33 in the Lifetime ISA.