ISA, LISA, or pension: the order I actually fund them in
The UK FI corner of the internet argues about this constantly, and having read a fair chunk of it now — Monevator's product focus, RESET's UK-specific take, the American blogs that don't have an equivalent argument to have at all — I've settled on an order that I actually follow, rather than one I'd defend in the abstract. Here it is, with the reasoning for each step, in the order the money actually goes.
1. Workplace pension, to the match
Non-negotiable, first, always. For every pound I put in, my employer adds roughly two on top, up to a cap. There is no investment return anywhere else that beats an instant, guaranteed multiple on day one. This step isn't really a savings decision — it's closer to leaving cash on a table you're already standing next to.
2. An emergency fund, in something that isn't locked away
Before anything gets tied up in a wrapper with rules about when you can touch it, there's cash sitting somewhere boring and instantly accessible. This is the "dig a well before you're thirsty" principle from the risk register post — build it while everything's fine, because you can't build it at the moment you discover you need it.
3. The Lifetime ISA, up to the annual limit
A 25% government bonus on anything paid in, up to £4,000 a year, is a better guaranteed return than the pension step above for a basic-rate taxpayer, and it's available whether the eventual use is a first home or retirement from 60. The catch is real: withdraw it for anything else and the penalty claws back more than just the bonus, so this only belongs on the list for money you're confident falls into one of the two permitted uses. Mine does, so it sits above further pension contributions in my own order — which is a personal call, not a universal one.
4. Pension, beyond the match
Once the match is banked and the LISA's annual allowance is used, pension contributions come back into it — and they're worth more than people assume once you've actually worked out your effective tax rate rather than just quoting your marginal one. Relief at the higher rate is better than relief at the basic rate, and salary sacrifice adds a National Insurance saving on top that a lot of people never realise they're leaving unclaimed.
5. Stocks & Shares ISA, for everything else
No bonus, no relief, but no restrictions either — full flexibility, tax-free growth, accessible whenever. Once the tax-advantaged, bonus-generating options above are full, this is where the rest goes, and where it'll stay for the vast majority of people who never come close to using the full £20,000 annual ISA allowance.
6. A general investment account, in theory
I've never actually reached this step, and neither has almost anyone I've read. It exists for completeness more than for practical use.
Why the order matters more than the amounts
Every step above assumes today's rules. The risk register post already said it: allowances change, thresholds freeze, age limits move, and the only sane response is to not build a plan that only works under exactly the current regime. The order is the durable part — match first, easy-access cash second, bonus-generating wrappers before plain ones. The specific numbers are the part I'd expect to be wrong within a few years, and that's fine, as long as the order still holds.
Not financial advice — I'm not qualified to give any. Contribution limits, LISA rules, and tax relief all change; check current thresholds before acting on anything above rather than trusting a blog post to still be accurate.