At some point in 2017 the government announced they would give a 25% bonus (to a max of £1000) on any money you put into a "Lifetime ISA" or LISA.
There are some restrictions to the deal such as you have to be younger than 40 to open a LISA, you can't take the money out until you are 60 and various other things.
This site's purpose isn't to explain the LISA as there are countless other websites with lots and lots of information about it.
What this site is here for is to document a very ambitious plan to turn a small amount of money (£4,000 per year) into a large amount of money (£1,000,000) in just over 20 years.
I opened my Lifetime ISA in April 2017 - paid in my £4k in the 2017/2018 tax year, again in the 2018/2019 tax year and then again this tax year.
Each time, within a few weeks, an extra £1,000 cash was added to my account. So my £12k became £15k.
Great, can't grumble at a 25% boost!
The very fact I have to hold onto this money in my account until I'm 60 means that I may as well do what I can to make it work for me.
To me, there's little point putting it in a savings account earning some piddly amount of interest. Perhaps if the rates were at 4% or more this may be worth it but as I write this the best I can hope for is 1.4%.
Woeful.
Ever heard of the 'rule of 70'?
It's very simple, divide 70 by the interest rate you get on your savings and it will tell you roughly how many years it'll take for your money to double. 70/1.4 = 50. Fifty years to double your money at 1.4%!
So 20 years of 1.4% interest won't get me anywhere near even doubling my money so saving is out - looks like I'll have to turn to the financial markets instead.
Over the first two years of the lifetime ISA's existence (up to 05/04/2019) I made investments in 11 different shares and sold all but two.
Each purchase was for £1,000 of the named share. I always specify that commission/dealing costs are on top so usually a purchase will cost around £1010 to £1020.
Any dividends are collected within the ISA so they drip in occasionally and boost the available cash. However, I don't tend to pay much attention to them and regard them as a welcome bonus.
In the third year of having the LISA (2019/2020) I have made 10 investments and sold one. At present I have 11 open investments - 10 of which are in profit. I'm still purchasing in "units" of £1000 per time.
To have one million pounds in my LISA on my 60th birthday I have calculated I will need to get a return of around 18% per year. That is starting with £15k on 06/04/2019 and adding £4k per year until 2029.
We can get into the maths later but this is where the experiment is at present:
£15k
£4k per year paid in
£1k per year LISA bonus
Need 18% return per year
Now I don't expect to make 18% per year consistently by trading shares. In fact, some years I may even lose money. However, I am aiming to make this return on average over the 20 years. A very lofty goal I'm sure you'll agree but one worth striving for.
Updates to this site should be regular. The aim is to try and justify the investments as I make them and explain why I am closing positions. Hopefully this will be interesting as well as profitable.
Yearly Returns: (last update 6th January 2024)
| Year | Return | Update Link |
|---|---|---|
| 2020 | (8.6%) | Update Thursday 31st December 2020 |
| 2021 | 25.4% | Update Tuesday 4th January 2022 |
| 2022 | (9.4%) | Update Monday 3rd January 2023 |
| 2023 | 4.6% | Update Saturday 6th January 2024 |