LISA is six months old on 6 October 2017
46% of AJ Bell LISA investments remain in cash
Passive investments prove popular as investors seek buy and hold investments
The average amount invested in an AJ Bell LISA is £2,520
66% of investors are over 30 and 45% are aged 36-40
Two LISA case studies available
LISA investors wary of markets
As the Lifetime ISA approaches its six month anniversary, new analysis from AJ Bell shows that many LISA investors are wary of stock markets that have only recently come off record highs. Almost half (46%) of AJ Bell’s LISA customers have not yet invested their money, preferring to hold it in cash.
Tom Selby, senior analyst at AJ Bell, comments:
“New LISA investors are clearly cautious of stock markets, which is understandable given their current level. It makes particular sense for first time buyers who may need access to their cash at short notice. The last thing a house buyer needs is for the value of their investment to fall at the point they need it for a deposit.
“Even those using their LISA to save for retirement may be opting to wait for a market fall before choosing to invest. However, for these people, timing the market can be difficult, so deciding when to take the plunge is a big decision. Investing for the long term means they have time to ride out any short term market volatility and if they are concerned about immediate market falls they could consider drip feeding their money into the market over the next year.
“It’s also important not to forget that cash still carries risk. In the long run, inflation will erode the purchasing power of cash and investors will miss out on the magic of pot-boosting compound returns.”
Asset | % invested |
Cash | 46% |
Funds | 29% |
Stocks | 13% |
ETFs | 7% |
Investment Trusts | 6% |
Source AJ Bell Youinvest
Passive investments come out on top
For the 54% of LISA holders who are investing outside of cash, passive investments are most popular with six out of the top ten most popular investments being passive funds. This suggests investors are looking for low-cost, off the shelf solutions to access markets. Only one of the top ten is a direct equity, a clear sign of demand for managed investment options from LISA customers.
Top ten investments made by AJ Bell LISA holders to date:
1. AJ Bell Passive Adventurous Fund
2. Fundsmith Equity I Acc Fund
3. Vanguard LifeStrategy 80% Equity Acc Fund
4. AJ Bell Passive Moderately Adventurous Fund
5. Vanguard LifeStrategy 100% Equity Acc Fund
6. AJ Bell Passive Balanced Fund
7. Baillie Gifford Managed (Class B) Acc Fund
8. Fidelity Index World W-Accumulation Fund
9. Lloyds Banking Group PLC ORD 10P
10. Scottish Mortgage Investment Trust PLC ORD 5P
Most popular with the over-30s
AJ Bell’s LISA has been particularly popular with savers at the higher end of the LISA eligibility spectrum with 66% of those who have opened an account aged 30 and over. 45% are aged 36-39 and 17% are aged 39.
The average amount invested in an AJ Bell Youinvest LISA so far is £2,520.
Tom Selby, continues:
“The Lifetime ISA has clearly been a catalyst for younger people to start their investing journey, which is a positive step in a day and age when many young people are not saving enough, if anything.
“There is also clearly a case of many people opening a LISA as their 40th birthday approaches. This is a smart move because once an account is open they can benefit from the Government bonus every year until they are 50 but if they don’t apply before they are 40 those bonuses are lost forever.”