Have you used up your ISA allowance for this tax year? If not, what are you waiting for?! You've now got less than two weeks until the new tax year starts and you lose your ISA allowance for 2015/16, but you're not alone if you're leaving things until the last minute. In fact, research from Fidelity International shows that the most popular day for ISA investing in the last tax year was 30 March – just five days before the deadline – so you've still got time!
Now's the time of year when people typically begin to realise that they haven't got long left to make their tax year investment, and as we all know, if you don't use it, you lose it. Happily, it shouldn't take long for most people to make the necessary arrangements – many accounts allow online management these days, so even if you haven't yet opened an ISA for this tax year, you shouldn't miss out.
However, just because you can leave your investment until the last minute, it doesn't mean you should. In fact, Fidelity's analysis reveals that you could earn a lot more if you drip-feed into your ISA throughout the year, particularly if you opt for a stocks & shares ISA: the figures show that if you invested a lump sum of £1,200 in the FTSE All Share at the end of each tax year since 5th April 2007, you'd be left with a pot of £13,664.15 after 10 years.
However, if you had regularly invested £100 in the FTSE All Share every month from the start of each tax year since 6th April 2006, you'd now have a pot of £15,198.30 over the same 10-year period, a difference of £1,534.15. And that's with a relatively small investment, too – just think of the kind of pot you could have accumulated if you invested the full allowance!
"It can be all too easy to leave things to the last minute, and investing your annual ISA allowance is no exception," said Maike Currie, investment director for Personal Investing at Fidelity International. "However, the perks of making the most of your ISA allowance early in the tax year rather than waiting until the very end are significant.
"If you invest at the beginning of the tax year, you give your money an additional 12 months of tax-efficient growth. The longer your investments are kept in the market, the greater the impact of compounding – that 'snowball' effect of building new investment returns on the investment returns you've already achieved. Starting early and splitting your payments throughout the year can lead to better returns overall than investing a lump-sum at the last minute."
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