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Asked a question 6 months ago

This is an add-on to my last question. Would you recommend a Cash lifetime ISA or a stocks and shares lifetime ISA?

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@Becca26 This really depends on your timeframe, the level of risk you're willing to take, and your goals (saving for a house or retirement).

Savings (cash LISA) is usually best if you know you'll want the money in a shorter time period, say less than 3/5 years. There's no risk to losing money with savings as you're given interest from the bank as your return.

Investing (S&S LISA) is usually for longer term plans, like minimum 5 years. If you invest money today and you want to buy a house next year, the market may be down over the next 12 months, which then if you withdrew the money to buy a house you're doing so at a loss. Having said that the market could go up in 12 months too but unlike savings you can't know how much return you'd get with investing. 5 years is usually mentioned as a good amount of time where the ups and downs of the market will average out where you're more likely to make some gains overall. Over a longer timeframe, these gains should be far more than the savings interest rates.

Either one you choose you're still getting 25% guaranteed bonus anyway

Both have their place and it depends on what you want the lifetime ISA for and your time horizon.

e.g. if you’re using it on a first home in the next few years - cash is probably the better choice as a S&S ISA risks being down when you need the money for a deposit. 

if this is just for retirement and you’re using the LISA to get the government bonus - a stocks and shares Lisa is better as it will on average return more over the long term and protects against inflation