How I invest: The NHS doctor giving their Lifetime ISA a second life after buying a house
Related
news
Shares Magazine
Saving for your first home is often the first major financial goal a person sets and for Aaron, getting over his anxiety that investing wasn’t for someone like him was a key part of achieving that dream.
Back in 2016 when Aaron was 26 and studying to become an NHS doctor, he opened a Lifetime ISA with the explicit goal of saving up to buy his first home with his now wife, who was also studying to join the NHS.
A decade later, Aaron still describes himself as a “novice” despite routinely going down YouTube “rabbit holes” and debating the latest market movements around the dinner table with his wife in the house they bought in Rotherham.
Back when he started out, Aaron recalls that he definitely wasn’t spurred by a boundless level of confidence in his investment abilities, rather he realised that doing nothing and leaving his nest egg purely in cash would not get them the keys to the castle.
“Saving alone gave me comfort in the short term, but it didn’t feel like a long-term plan for the future I wanted,” he says.
“I saw that I had this pot of money we’d saved up already to buy the house, and I thought ‘I’m probably going to earn more on it being in the market versus just being in a Cash ISA’.”
Aaron grew his pot from £2,000 to more than £10,000 over four years and after combining his ‘half’ with his wife, who had set up her own LISA “mirroring” his – the pair bought their home just before the pandemic hit in 2020.
Buying a house was just the beginning
But this turned out to be just the start of his investment journey. “I kept the Lifetime ISA open after we bought the house because I thought ‘my investment experience doesn’t have to end here really; it can start all over again’”.
A Lifetime ISA is primarily used to help save up for and buy your first home; in just the way Aaron initially used it.
There are some specific requirements to remember. Number one being that the house must be purchased for less than £450,000, but it’s an extremely handy tool as the government will top up your Lifetime ISA contributions by 25%, up to a maximum of £1,000 each year (achieved when you hit the maximum Lifetime ISA allowance of £4,000 per tax year).
But what do you do with a Lifetime ISA once you’ve bought the house can be a conundrum. Aaron opted to turn his into a savings vehicle for retirement, the main alternative purpose for a Lifetime ISA.
This is a useful option, not least because it can allow you to avoid dipping into your pension too early. You benefit from a lengthy time horizon, since you must be aged 18 to 39 to qualify for a Lifetime ISA (though you can keep making payments up to the age of 50, and penalty-free withdrawals will only happen once you turn 60).
Now, aged 36 and working in the NHS as a trainee clinical endoscopist Aaron and his wife – a psychiatric nurse – realised that that state pension their parents had retired on “probably won’t be there when we come to retirement”. Enter repurposing his LISA to “hopefully replace that”.
The end of the Lifetime ISA
The route available to Aaron and existing Lifetime ISA holders of switching focus from building up a pot to get on the property ladder to augmenting a retirement pot will not be on offer to future savers and investors from April 2028 when a new ‘first-time buyer ISA’ will launch. This won’t come with the option of using it as a retirement savings vehicle. Though existing Lifetime ISA holders will retain the current benefits of the vehicle.
Ready to start the next investment mission
Ready to start on his next investment mission and with several decades ahead of him Aaron felt comfortable taking on more risk this time around, investing in the AJ Bell Adventurous fund and the Vanguard FTSE All World ETF.
This is secondary to his ‘fun pot’, where Aaron takes more speculative trades on assets such as Bitcoin.
Since starting from zero again, Aaron has successfully rebuilt his portfolio back to around £5,500 today. Aaron’s approach has shifted from the ‘stock picker’ mentality he had when he first opened the Lifetime ISA.
“When I look back at what I was buying when I first opened these accounts, I was thinking I was a stock picker. And some did OK, but I’m not pretending that I’m the next Warren Buffett or anything like that,” Aaron explains.
One big change over the past year Aaron says, is that all the big market events, namely ‘Liberation Day’ but also the recent US-Iran-oil crisis selloffs, “has taught me to diversify,” he says, not just on his holdings but the types of ISAs he has as well.
In his initial investment venture, Aaron just had the Lifetime ISA, “but then I decided I needed a Stocks and shares ISA to get a little bit more of an edge that way”, he explains.
Cost is a big factor for Aaron when it comes to picking his investments, leading him towards index trackers primarily. He says he’s looking forward to May when AJ Bell’s fees change and the £1.50 charge for customers’ regular investment service will be removed entirely, which for Aaron will open up some more “flexibility” to purchase some more options on his buy list.
Investing has changed his relationship with money, for the better
One unexpected impact from investing was how Aaron’s relationship with money changed for the better.
He said that it was subtle at first, but it made him more disciplined and focused on consistency rather than a short-term wins to that point that now, investing has become a bit of a hobby for him.
“I started making small contributions each month and that just starts to lead you down a rabbit hole when you start seeing more returns, nothing huge, but a little bit more than what I saw the first couple of years,” Aaron said.
“And you start looking at adding a few spreadsheets here and there, and you’re looking at the forecast and actually thinking, ‘All right, so if I just change my day-to-day habits and be a bit more conservative, and then push a little bit of money to a side every month one day, this is going to grow into something quite nice’,” he says.
It wasn’t just his relationship with money that changed, also the one he had with his wife and father once they began investing as well.
“It’s a team effort and we’re very transparent with money,” he says. “We have that relationship now where we talk about what we’ve read or seen, news about share buybacks and things like that. But that definitely wasn’t what it had always been like.”
It was especially striking with his dad as Aaron didn’t come from a family of investors but “now when we do meet up and have a chat we get really excited for these conversations, because we’re building up”, says Aaron.
Being able to have these chats with his family is one of Aaron’s few opportunities to talk about the markets, as none of his friends are actively investing.
“I try to encourage conversation around it, but I think everybody thinks it’s a bit boring,” he says. He hopes that that changes and says he’ll continue to try and get them engaged “because it’s only going to get cheaper and better, isn’t it, which is brilliant”.
Eve Maddock-Jones: Funds and Investment Trust Writer
Eve joined AJ Bell in 2026 as a funds and investment trust writer. She was previously editor at Investment Week, reporting on all major retail investor news, covering funds and investment trusts, ETFs and regulation...
