CATEGORY / Financial

The Difference between Lifetime ISA and Help to Buy ISA

ISA stands for individual savings account. It is a particular class of retail investments targeted towards the citizens of the United Kingdom. There are two different types of ISA, aiming towards the first time home buyers:

  1. Lifetime ISA
  2. Help to Buy ISA

The former will be available from 2017 and typically will aim towards assisting savers who have deposited for their first home as well as for their retirement. The Government will provide a 25% bonus on the scheme.

The latter was established at the end of last year and encouraged first time buyers to save for a deposit on their homes. Like the Lifetime ISA, the Government gives an incentive of 25% bonus in order to advance the savings. Read on to know the differences between the two individual savings accounts.

Differences between Lifetime ISA and Help to Buy ISA

1.     Age Limits

People aged 16 and above can create Help to Buy individual savings account if they fulfil the eligibility criteria. However, those who open these accounts have to be financially capable of contributing by 2029. All those people who are between 18 and 49 years of age can open a Lifetime ISA from next year.

2.     Maximum Bonus by the Government

If the account holder has saved the complete £12,000 limit, then the government will a maximum bonus of £3,000 on a Help to Buy ISA. Maximum bonus by the government on the Lifetime ISA is £1,000 per annum upon saving of £4,000 and it shall be paid on annual basis from the age of 118 years until the account holder turns 50 years. This means that a saver can get a maximum of £32,000.  Keep in mind that in both the types of ISAs, the bonus provided is per person and not per household. This implies that people aiming to buy together can both benefit from the scheme.

3.     Withdrawal Conditions

Money from Help to Buy ISA can be withdrawn at any given time period. However, you cannot replace it immediately — you deposit £300 and withdraw £50 from the account, you cannot make another deposit until the next month. There are no additional fees for withdrawing the money but there will be a decrement in the bonus.

For the first 12 month the holding period on the account will be functional before the withdrawal. This also takes into account the government bonus on retirements and first time home purchases.  When you are withdrawing the money for a home, then the money ought to be given to a conveyance. If the withdrawal is not for either one of these purposes, the bonus amount will decline and there will be a charge of 5% interest as well.

Contribution Period

The Home to Buy ISA can be opened until 30th Nov, 2019n and contributions have to be made till the year 2029. By this time, the balance should be £12, 000 including the interest. In Lifetime ISA, the savers are allowed to create their accounts from 18 years – 39 years. However, the bonus will only be paid on the contributions until the account holder turns 50 years.

Property Value

Through the Help to But ISA, saver can buy property worth £250,000 and £450,000 in London. With the Lifetime ISA, account holders can procure any property worth a maximum of £450,000.

Why Graduates in the UK Regret Enrolling in a University

There are an increasing number of graduates in the UK that are regretting enrolling in a university. In fact, 1 in 3 millennial graduates are not happy about going to a university due to debts. The research on UK graduates was done by Aviva and was published before A-level results were announced. In the company’s report, it sheds light on the feeling of regret that most graduates come across after enrolling in a university.

Generation Regret – A Study on UK Graduates

Aviva completed its research on UK graduates who regret enrolling into a university. The research results made it evident that a majority of the graduates who hated their decision of getting into a university was based on the financial hardships that they suffered as a result of their studies. Many of the graduates are worried about adding up their debts, which is why they want to put university on hold and look for jobs.

According to the study by Aviva that is named ‘Generation Regret’, almost 37% of graduates regret their decision of going to a university due to the debt that they have accumulated and have to pay off. Another aspect of this research study showed that almost 49% of graduates believed that they would’ve done perfectly fine without graduating from a university.

Decreased Value

The study results clearly proved that almost 50% of UK graduates did not find their university degrees useful. Millennial graduates in the UK do not perceive university degree to be helpful in advancing their career. Most of the university graduates part of this study said that they would’ve got their current jobs with or without a graduate degree. This shows that the curriculum taught in universities is not as valuable as the money that is spent on it.

Increased Burden of Debt

The other reason that came out as a result of the Aviva study clearly shows that most graduates regret attending a university and getting a university degree due to the debt it put them under. The cost of universities is so incredibly high that the majority of students are unable to pay for the tuition on their own. This means that more students opt for student loans which they are unable to pay off and accumulate lots of debt.

However, tuition fee for universities was not so high and it was only until 1998 that the government started charging for university tuition. The tuition fee for universities in England and Wales spiked to £9,000 a year in 2012, which is a hefty amount of money to pay. The university tuition fee in the UK rises with every passing year. That’s the reason more students are not only hesitant in enrolling in a university, but a majority of those who attended regret their decision.

By reading through the aforementioned study, it is clear that the burden of debt is far greater than the value received from universities in the UK.

Corporate Finance Catering To a Capitalization Structure

With the issuing of the general financial rules in the year 1947 certain guidelines were drawn then that would help in maintaining the sectors catering to the different branches of finance. The liberalization of goods, outsourcing of services and with further development in the communication and information technology these general financial rules has undergone revisions. But they still hold on to their major objective of guiding the various finance sectors over the period. The corporate finance sector deals with the financial resources of the major corporations.

Stock prices, stock exchanges commodity values are some of the other issues that have to be well researched while preparing the capitalization structure.  The funding and outsourcing of this finance become one of the major points of concern. The mobilizing of the investment resources and managing the expenditure are common concerns of both public and corporate funds. Investment banking is another arena where knowledge of corporate finances can help. Mergers and taking overs of companies, directly and indirectly, affects the banking sector. The acquisition and selling of businesses, equity-related issues and some of these aspects are needed to be considered while making any investment in the corporate sector.

Proper Investment

Management of finance needs proper investment analysis. It is only after analyzing the proper investment techniques and schemes that a corporation and think of investing its finance into it. It needs a lot of concentration and precision because one wrong step can bring down the whole corporate sector. Investment appraisal in one such aspect that company tries to deal with every year. During this appraisal, the company plans on investing its finance into new machinery, new products, programs or any replacement. The inequity, debt, capital structure have to be studied and analyzed thoroughly before one plans for an investment appraisal.

Sources of capital:

Capital budgeting includes many methodologies and techniques which can help in structuring the budget and in handling the finance in the best possible way. Some of the methods are checking on the profit margins, the annual costing, the various options for valuation, the rate of return, rate of accounting returns. For a potential investment, the capital plays a significant role. Without a proper structuring of the capital budget, the entire corporation shall lack on making proper target and in taking up the best opportunities for further investment in good schemes. There are different kinds of projects that can help in investing such as mutual projects or independent projects.

Proper management:

To make a corporation work actively the capital working position of the company is very significant. While dealing with the business operations, the management of capital in quite essential. In this case, the assets and liabilities are to be studied. The whole concern of management of corporate finance is to increase the value of the firm at the end of the day. The goal can be set accordingly which shall serve regarding long-term strategies or short terms goals. Using new techniques of managing debts, cash and inventing new patterns can help in further financial management.

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