This week saw the launch of the newest form of Isa, but with only three providers offering the Lifetime Isa at launch and no banks and building societies offering it, savers have few options.
T his week saw the launch of the newest form of Isa, but with only three providers offering the Lifetime Isa at launch and no banks and building societies offering it, savers have few options.
The new Isa allows people to save £4,000 a year and get a £1,000 Government bonus. It can be opened up to the age of 40, meaning those who had already turned 40 by April 6 were not eligible.
The money can be used either to buy a first home or saved until the age of 60, when it can be redeemed.
However, just Hargreaves Lansdown, the fund shop, the Share Centre, another fund shop, and Nutmeg, an online-only adviser service, were ready to offer the Lisa on its launch day.
Other fund shops, such as AJ Bell and Fidelity, will launch at some point, although have yet to give a date. The first cash-only version of the Lisa will be available from Skipton Building Society in June.
T he Isa has been controversial up to its launch, with Nationwide being one provider to say it will not offer the new Isa at all, as the exit charges are too punitive.
If you want to take your money out before the age of 60 and not to buy your first home, you will pay a 25pc charge on your total pot. This is intended to reclaim the government bonus, but it will also take a chunk of any interest or investment growth savers have seen and takes some initial capital they have contributed.
The offering from the Share Centre has also been criticised for its high charges , with the fund shop only allowing investors to put their money in three ready-made funds, which have an ongoing charge figure of between 2pc and 2.1pc.
Nutmeg charges 0.75pc for investors using one its ready-made funds, while Hargreaves Lansdown charges 0.45pc for its administration fee, with fund charges coming on top of that, depending on the fund picked.
For many, the Lisa will be the first time they have invested money. Olivia Wilson, 18, will be one of the first Lifetime Isa investors in the country. She is opening the new Isa product in order to save for a house.
Currently living at home and taking her A-Levels this year, Ms Wilson plans to go to the University of Worcester to study geography in the autumn.
S he will move some of her existing savings into the newly-opened Lisa and then wants to save any spare cash she has, making ad-hoc contributions when she has money to spare.
However, like most young people, Ms Wilson has never invested before. She is not savvy about investment markets and said she will park her money in cash while she works out where to invest.
However, on Hargreaves Lansdown, where Ms Wilson is investing, money held in cash receives no interest. The platform waives its usual 0.45pc charge if you hold money in cash rather than invest it, but the money will earn nothing.
