Lifetime Isa providers are seeing investors who are just under the maximum age limit pile into the new savings vehicle to keep the door open for the government bonus later on.
It has been just over a month since the Lisa launched on 6 April, and according to the handful of providers offering the vehicle, demand for the controversial savings product has breezed past expectations.
The new Isa lets individuals under the age of 40 save towards their first home or towards retirement, with users being able to claim a 25 per cent government bonus on contributions up to £4,000 a year.
Figures from Hargreaves Lansdown revealed that 18 per cent of its Lifetime Isa investors are 39-years-old, therefore scraping under the age threshold.
Danny Cox, chartered financial planner at Hargreaves Lansdown, said the older investors are opening an account so they can contribute savings throughout their forties, and therefore get the accompanying government bonuses.
The FTSE 100 wealth manager has seen 13,319 Lisa accounts opened so far.
Mr Cox said it was “little wonder” the Lisa has proved popular as it offers a generous government bonus.
Meanwhile, figures from the Share Centre found more Lisa customers were aged between 35 and 39 than any other age range.
Figures for the first month found 36 per cent of the Share Centre’s Lisa investors were aged between 35 and 39, while just under a quarter of the total investors were aged between 30 and 34.
The 25 to 29 and 18 to 24 age brackets made up the smallest proportion of total Lisa investors, at 21 per cent and 20 per cent respectively.
Darren Cornish, director of customer experience at the Share Centre, said many Lifetime Isa customers are investing adventurously, apart from the 25 to 29 age bracket which are taking a lower risk approach.
He said these figures therefore defy concerns about the younger generation taking huge gambles with their money.
“This suggests that, for all the criticism of the Lifetime Isa before launch and the fears of mis-selling, younger investors have understood the investment risk, returns and timeframes, and are making their decisions accordingly,” he said.
Mr Cornish also pointed out that this particular age bracket has a shorter time frame to use the money to buy a first house, and therefore avoid putting their savings into risky investments which they could potentially lose.
According to Hargreaves Lansdown, Lifetime Isas investors have favoured tracker funds, which Mr Cox said "makes sense" bearing in mind passive funds tend to be more popular with the younger generation.
Lisa Caplan, head of financial advice at online investment manager Nutmeg, said: "Interest in the Lifetime Isa has been high and has in fact exceeded our expectations.
“What was particularly notable was the level of interest in the product on the first day of launch,” she said, pointing out that customers opened 1,217 Lisa accounts on 6 April alone.
She also said Nutmeg has seen an even split across the different risk levels on offer.
Scottish Friendly has set up a ‘Lisa Access’ account which lets people save into a normal Isa in the first instance before transfering into the insurer’s Lisa vehicle when it opens later this year.
A spokesman from Scottish Friendly said: “What’s interesting is most people who are taking out the Lisa are quite close to the maximum age.”
So far, he said investors have been committing between £10 and £100 a month.
Other providers which have confirmed they will launch a Lisa in the next few months include True Potential and Skipton Building Society.
katherine.denham@ft.com
