J Edward Sellars

As one of the simplest ways to save and invest your money, ISAs have become more and more attractive for investors since they were launched in 1999.

The annual allowance has steadily increased from £7,000 to £20,000 and this tax year, they have become even more valuable with the cut in the dividend allowance.


Any form of investing is best seen as a long-term business for investors. However, the end of the tax year is often referred to as the ‘ISA season’, so many investors are lead to believe that March is the best time of year to open one and use their allowance. While this may well be true for cash ISAs – as banks and building societies compete with interest rates to entice savers – when it comes to stocks and shares ISAs, the earlier in the tax year you invest, the better.

As soon as you invest in a stocks and shares ISA, your money is sheltered from tax and can begin to grow. This can have a big effect on your potential long-term returns. So, although you have all tax year to open your ISA and use your annual allowance, it is worth considering acting sooner rather than later.

For example, research from Fidelity found that early bird investors could be £10,000 better off compared to a last minute investor. Based on the investing habits of hypothetical investors, the study found the following results:

Over the past 10 years, the Early Bird Investor invests his full ISA allowance into the FTSE All-Share early each year. Based on a total contribution of £123,000, this investor would see their final investment valued at £180,000.

Whereas by comparison, the Last Minute Investor who invests his full ISA allowance at the end of each tax year, would see their final investment valued only at £170,128.*

However, investing in real-life can be complex. Remember, the value of investments can go down as well as up, so you could get back less than you initially put in. This is why it is always important to seek professional financial advice before making any decisions.

If you would like to talk to us about your investments, the JES Stocks and Shares ISA or any other aspect of your wealth management, please call us on 01934 875 919.

* Source: https://www.fidelity.co.uk/invest-isa-allowance-2018

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