Timing pays off for the early bird ISA investor

Investors could be thousands of pounds better off by investing their full ISA allowance at the start of the tax year, compared to a last-minute ISA investor or even one who drip feeds money each month, according to research* which examined the investing habits of hypothetical ISA investors over the last 10 and 20 years.

The study concludes that if you were an ‘Early Shirley’ and invested your full allowance on 6 April for the past 20 tax years, you would be nearly £12,000 better off now than ‘Last Minute Lara’ — someone who had waited to invest on the last day of each tax year.

For those unable to afford the full ISA investment in one lump sum, consider investing like ‘Monthly Monty’, who uses a monthly savings plan to drip-feed money into an ISA. This approach is also likely to achieve better returns than investing it all at the last minute. The research figures show that by splitting your annual ISA allowance into 12 monthly investments, your investment would have grown to £296,247 over 20 years, which is still £7,496 more than if you had waited until the last minute.

*Fidelity International, April 2020 Total Return in GBP of FTSE All Share