How to make (at least) £83.3 in guaranteed passive income every month
One word: LISA.
If you were looking for a monthly savings goal, then this is the one to start with: £333.3. The government will give you £83.3 on top every month until you turn 50.
Lifetime ISA: What is it?
- A type of ISA account where you can deposit money that can be used either for retirement or as down payment for your first house.
- The maximum allowed contribution is £4,000/year tax-free!
- The government contributes 25% bonus, up to £1,000/year.
- The bonus is paid every month which is great for compounding if you’re planning (like me) to hold a stocks and shares LISA.
- There is a 25% penalty if the money is withdrawn for a purpose other than buying your first house, being over 60 or terminally ill, with less than 12 months to live.
Making more than £83.3 per month
This is where opting for a stocks & shares LISA instead of a cash LISA comes in handy. Depending on your current age and when you’re planning to withdraw the money, you can make up to £592,000 by the time you hit 60 (assuming you’re 18 now and are maxing out your LISA account every year).
In my case, I’m 27 and I’m planning to use my LISA for retirement. Assuming a very conservative 5% annual interest rate, I’m looking at making £357,797.74 by the time I’m 60 from LISA alone!
I have found this US government site really good to calculate the potential payout as shown below.
Taking action
There are many providers that offer stocks and shares LISA. I’m personally opting for Nutmeg because I really like the user experience and how transparent they are with the fees. I’m choosing their most adventurous level of risk too. The minimum deposit required by Nutmeg is £100.
No matter which provider you choose don’t delay taking action. You can always change providers afterwards.
Most importantly, don’t miss out on the opportunity to gift yourself an up to ~£400,000 lump sum when you turn 60.
If you’ve read this far then shoot me a message to thewalkinginvestor@gmail.com to let me know that you’ve taken this first step. I’ll send you virtual claps and add you to our Telegram community of beginner investors!
