Investing is scary though, I just wanted the 25%
I hear you. I’m going to give you a bit of a hack if you really don’t want to invest. It only works for £10,000 and under though and only with one provider.
But I’m also going to try and convince you that investing isn’t scary and you don’t need to be Warren Buffett.
The Hack
The hack if you’re dead against investing is to open a LISA with AJ Bell, deposit cash, and don’t invest it.
Just leave it as a cash balance in the account. You’ll still get the government bonus but you won’t have had to invest.
The reason is that AJ Bell don’t pay interest on accounts with cash of £10,000 and below. See here.
Like I say, it’ll only work until your balance hits £10,000 but you can only do a maximum of £4,000 per year anyway so you should be good for at least 2.5 years.
Investing
If you do the above, you’ll get your 25% bonus which is a great return. But if you invest, you could be growing the total amount of cash via an investment.
Here’s why you shouldn’t be scared: if you go for an AJ Bell LISA or a Hargreaves Lansdown LISA, you’ll be able to select from a bunch of sharia-compliant funds.
If you don’t know what a fund is, it’s basically a basket of companies that have been pre-chosen by a specialist fund manager.
You’ll have to pay a small management fee to buy into the fund, but in return you’re getting the opportunity to benefit from the value of the fund increasing because the shares have hopefully done well.
By buying a fund, you’re also not having to worry about choosing which shares to buy yourself.
So you could deposit your £4,000, get your £1,000 bonus for year 1, and invest the lot in a sharia-compliant fund. If that fund price increases by say 8%, you’ll be up a further £400.
Obviously fund prices can go up and down so you are exposing yourself to loss too, but over time, the stock market tends to smooth out.
I’ve mentioned AJ Bell and Hargreaves Lansdown as I know they have decent Islamic options in their fund offerings. You can take a look at them in our halal investing comparison page.