Lightroom External Editor - PSD or TIFF?

When I go from Lightroom to PSE for stitched panoramas or editing I can't do in Lightroom, I have been saving my edited images in psd format rather than tiff. I often do some further post back in Lightroom after saving. Is this the right thing to do or would I have more flexibility saving the images in tiff format?

I always prefer TIFF, even though they're larger files. PSD, being a native Photoshop file format, might not be readable by other applications.