Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Maren Dings
Speaker 1: Your Money, The Person Will Findance edition of Maren Talks.
Speaker 2: Money and these bonus podcasts.
Speaker 1: We talk about the best strategies for making the most
Speaker 1: of your money and Maren's umset web and with Me
Speaker 1: Senior Reporter and Money to stilled author John Steberg.
Speaker 2: Hi John Hi Man.
Speaker 1: Right. So, last week we answered a big pil of questions,
Speaker 1: are attempted to answer a big pile of questions. We
Speaker 1: get so many really interesting questions and comments coming into
Speaker 1: the mailbox, which we really really appreciate. So we spoke
Speaker 1: about a whole little topics last week. But this week
Speaker 1: I really wanted to address the whole Isa Lisa's sip
Speaker 1: thing because we did a podcast you and I got
Speaker 1: I can't remember, maybe a few months ago now, where
Speaker 1: we talked about the the Lisa the lifetime is sa
Speaker 1: Li said Lisa, we got.
Speaker 2: I think everyone ever ever agrees on.
Speaker 1: That anyway, whatever it is, the Lisai Lisa Lifetime iSER
Speaker 1: the one where if you're under forty you can put
Speaker 1: what is it, four thousand pounds a year and government
Speaker 1: tops it up by another ground. You get a twenty
Speaker 1: five percent contribution, and so you can contribute until your
Speaker 1: you can open it until you're forty, contribute until you're fifty,
Speaker 1: I think, and then you can use it to buy
Speaker 1: a house up to a value of four hundred and
Speaker 1: fifty thousand pounds. And if you don't do that, you
Speaker 1: can leave it in and then take it out on retirement,
Speaker 1: but slightly later than the SIP, so I think it's sixty.
Speaker 1: You can then take that money out and you and
Speaker 1: I would be like, well, I don't know, because you
Speaker 1: can't take it out until you're sixty, So why wouldn't
Speaker 1: you just use an ordinary sip. And if you take
Speaker 1: the money out without spending it on a house before
Speaker 1: you're sixty, you lose all the contribution, and so you
Speaker 1: can end up losing a reasonable amount of your own money.
Speaker 1: And then of course if you don't buy the correct
Speaker 1: priced house, then you also lose money. So we talked
Speaker 1: about this and we're like, oh, I don't really know
Speaker 1: about that. Doesn't seem doesn't seem all that, But a
Speaker 1: lot of people disagree with us. So I wanted to
Speaker 1: just run through some of those emails and explain why
Speaker 1: some people just think that we're wrong to be sniffy
Speaker 1: about it, and you know, probably we are.
Speaker 2: I don't know. I just seems to need to be
Speaker 2: complicated and risky. But anyway, here we go.
Speaker 1: So here's one from James. He says, I really enjoy
Speaker 1: the show excellent. I understand the points that you make. However,
Speaker 1: anyone under forty who has bought their first house already.
Speaker 2: Should still consider using one.
Speaker 1: Why because you get twenty five percent return almost immediately
Speaker 1: on a four thousand pounds annual basis, So it's not
Speaker 1: like in most things the return is spread out over
Speaker 1: the year. It comes to you in a honner, so
Speaker 1: then you're effectively making the return on five grand for
Speaker 1: the full year. So the contribution and the top up
Speaker 1: are literally invested from day one, and on his sums,
Speaker 1: the net result is an additional thirty four thousand, seven
Speaker 1: hundred and nineteen thanks to the precision available in your
Speaker 1: licet for use in retirement. So he's made it. He's
Speaker 1: made an assumption of returns and if you have to
Speaker 1: put that return up, obviously it would be further. And
Speaker 1: his overall view is that you should put whatever you
Speaker 1: can into a SIP first so you can reduce your
Speaker 1: high additional tax rate impact and claw the tax pack, etc.
Speaker 1: Of course, and then four thousand pounds straight into your
Speaker 1: list and then everything else into your eyesep I'm interested
Speaker 1: in that way around because you know, not everyone agrees
Speaker 1: with that. Now now that the SIP is not IHT efficient,
Speaker 1: a lot of people are, so how much you put
Speaker 1: into your step? So that's interesting, right onto the next one,
Speaker 1: and then I'm going to ask you what you think
Speaker 1: about all this, John. I've been a fan of you
Speaker 1: and John Stuffick since the Money week Days and rarely
Speaker 1: miss a podcast.
Speaker 2: Excellent, that's what I like to hear.
Speaker 1: He again is asking about the same thing, and he
Speaker 1: says that he thinks that we've been a little down
Speaker 1: on the LISA. He said, what works for him is
Speaker 1: that you can take it in time hirely tax free
Speaker 1: at sixty years old, unlike with a SIP, when, of
Speaker 1: course you only get twenty five percent tax free and
Speaker 1: you have to you have to pay your marginal rate
Speaker 1: of income tax on the rest. So in that sense
Speaker 1: he reckons that the the LISA is more or tax
Speaker 1: efficient for lower rate taxpayers than a pension. He also
Speaker 1: says that he thinks that the tax free. Status of
Speaker 1: past contributions to ALYSA looks more secure to me than
Speaker 1: that of a SIP, so it's less likely to be
Speaker 1: fiddled with, which I think we might agree with that
Speaker 1: to you, because we've always said that we think the
Speaker 1: government will come for is as lost because everyone understands ices,
Speaker 1: everyone gets iOS, and everyone feels their ices are very
Speaker 1: much theirs.
Speaker 2: Whereas are smaller.
Speaker 1: Yeah, and Simpson pencils are a little bit more distant.
Speaker 1: He also says, with serious ill health, you can accept
Speaker 1: your Lisa penalty free, and an extremists you can access
Speaker 1: the funds anytime with that twenty.
Speaker 2: Five percent penalty.
Speaker 1: Yeah, so you know, to my mind, this penalty can
Speaker 1: actually be a good thing for young people using ALYSA
Speaker 1: for a time and saving stopsum dipping into the pot
Speaker 1: for holidays, et cetera. So in that sense is better
Speaker 1: than an ordinary ism. There again, okay, I'll give you that.
Speaker 1: I'll give you that. And finally he says that non
Speaker 1: taxpayers can only pay eight hundred and eighty pounds into
Speaker 1: a SIP, but they can add a further four thousand
Speaker 1: pounds into a liser. Of course, we could say, well,
Speaker 1: you know, you can put twenty grand into an ordinary,
Speaker 1: I said, but this does give you that tax back, so.
Speaker 2: You know, yeah, okay, I get that.
Speaker 1: And by the way, something that wasn't clear on the podcast,
Speaker 1: although I think I did say just now, was that
Speaker 1: the LISA can be opened until you were forty, and
Speaker 1: once opens, you can contribute until you are fifty. So
Speaker 1: I think good points, particularly for lower rate taxpayers there.
Speaker 3: I wouldn't disagree with any of those. And I think
Speaker 3: there was a that's a particularly good point about the
Speaker 3: the political risk, the lyser and also the fact that
Speaker 3: you can take the whole thing tax free whenever you're sexty,
Speaker 3: only get the twenty five percent lump someone the SIP.
Speaker 3: So yes, we were probably a little bit harsh, and
Speaker 3: I actually thought the other point that the latter podcast
Speaker 3: listener made was that if you're paying into a kind
Speaker 3: of pot for your spouse who's a non taxpayer, on
Speaker 3: your kids, even you can only put two eight hundred
Speaker 3: equidity SIP, which then growsed up to three six, but
Speaker 3: you could put the full four k and Eliza, and
Speaker 3: again that's effectively a pension contribution with a different kind
Speaker 3: of like tax status at the end. If you're talking
Speaker 3: about for a non working person. So that's something I
Speaker 3: hadn't thought of, and actually I think makes quite a
Speaker 3: lot of sense. And yeah, and obviously if you've got
Speaker 3: these allowances and you've used them all up already, then
Speaker 3: it is worth using up. This is an extra chunk,
Speaker 3: A lot comes off your eyes.
Speaker 2: Allowance if Yeah, okay, so we were a little harsh.
Speaker 2: We were a little harsh.
Speaker 1: I'm not one hundred percent convinced, but I do take
Speaker 1: all those points. I do take them. We were a
Speaker 1: little harsh.
Speaker 3: Yeah, I suppose the other issue is dislike a fiddliness.
Speaker 1: Yeah, we hate field, hate fudge, hate admin.
Speaker 3: There's a slight and sorry for teen his name and
Speaker 3: being the Martin Lewis noess about the whole thing of Okay,
Speaker 3: you need to do it in this or order and
Speaker 3: you need to can I fill this one up, but
Speaker 3: don't put too much in this one and then compare
Speaker 3: the you know, et cetera, et cetera, and the element
Speaker 3: you can I spend in an awful lot of time
Speaker 3: to say something it's terrible says, but as to whether
Speaker 3: you can be bothered, there's something they take out their
Speaker 3: account here by doing those are all reasonable points. And
Speaker 3: these are bigger sums than just you know, switching bank account.
Speaker 1: Regularly, just switching energy providertly. If the numbers were here correct,
Speaker 1: which I'm sure they are because our readers are very,
Speaker 1: very literate.
Speaker 2: Thirty four pounds.
Speaker 1: It's a cruise, Joe, many cruises. It's three months on
Speaker 1: a Disney cruise ship. Again, adult Disney is a thing.
Speaker 3: It's really you just put me right off.
Speaker 2: It's the norlwedge of fuels for us, John, Thanks for that.
Speaker 1: Everybody, any more comments on licens and isis do send
Speaker 1: them in because you know, obviously this is a naughty issue.
Speaker 1: But thanks for all those emails.
Speaker 2: Thank you, John.
Speaker 1: Thanks thanks for listening to this week's Marrion Dogs your Money.
Speaker 1: If you like, I'll show, rate, review and subscribe wherever
Speaker 1: you listen to podcasts. Also, be sure to follow me
Speaker 1: in John on x or Twitter at marins w and
Speaker 1: John and the Score step back. This episode was produced
Speaker 1: by some Sidy and Moses and questions and comments on
Speaker 1: this show and all our shows are always welcome. Our
Speaker 1: show email is Marin Money at Bloomberg dot net.