Don't wait until the last minute to invest this year's ISA allowance. Chances are, you'll make more money if you get cracking now.
Have you ever opened an ISA at the last minute? Just a day or two before the annual ISA deadline?
I certainly have. When you lead a busy life, getting an ISA is never at the top of your priority list - it can always wait another week or two. But when the deadline is only 48 hours away, everything changes and you’re then in the middle of a mad rush to open an ISA before it’s too late.
If you’ve ever been a last minute merchant, you’re not alone. We always see a big rush for new ISAs in the week or so before the tax year ends in April
However, I think this approach is a mistake. If you get an ISA in a hurry, you’ll have less time to pick the right ISA for you. That applies whether you’re going for a Cash ISA, a Stocks & Shares ISA or a mix of the two.
What’s more, research from Fidelity shows that people who invest at the beginning of the financial year make more money than folk who wait until the very end.
Let’s look at two people who since 1999 have invested their full ISA allowance every year in a FTSE 100 index tracker fund. One person invests at the beginning of the year, the other at the end. According to Fidelity, the early bird investor is now £2,000 better off than the last minute merchant.
[SPOTLIGHT]This research doesn’t surprise me. When it comes to investing, time is one of the investor’s best weapons. The longer you stay invested, the more dividends you’ll receive from companies, and if you reinvest those dividends, the more your investment pot will grow.
Do it now!
So the lesson is clear. If you have any spare cash to invest in an ISA, crack on and do it now. The new financial year has just started, and the new ISA allowance for this tax year is £11,520. You can put up to half of that allowance in a Cash ISA (£5,760).
If you’re not sure where to place your ISA cash, you can get some great ideas in these two articles:
The UK’s best Stocks and Shares ISAs
The best Cash ISAs for the new tax year
Just make sure you don’t get caught up in a mad rush before the next deadline in April 2014!
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