The early bird ISA investor catches the worm

07 April 2015
 
  • An estimated 40% of people invest in the last three months of the tax year
  • No need to play “Russian roulette” with your long-term savings by making hurried last minute investment decisions

Many investors took the plunge and rushed to invest in an ISA during the final days of the 2014/15 tax year, with the last application for a 2014/15 ISA via Tilney Bestinvest’s website completing at 11.54pm, just six minutes before the allowance disappeared for good.

Tilney Bestinvest estimates that around 40% of people invest in the last three months of the tax year, a large chunk of which do so in the last fortnight.  In contrast, around 15% of Tilney Bestinvest’s clients were ‘early birds’ who began investing in April 2014.

Jason Hollands, Managing Director at Tilney Bestinvest said: “It is human nature to leave things until the last minute. Last week saw the annual eleventh-hour stampede of applications for ISAs and pensions; with some even making these important long-term investments on the evening of the Easter Sunday Bank Holiday, when most people would surely prefer to be spending time with their family or friends than entering their debit card details and national insurance numbers on a website. The emergence of online investing, by making the process easier than the old days of paper application forms and cheques, seems to have almost encouraged investing late in the day.”

Hollands continued: “Not only does investing earlier in the tax year remove some of the pressure to make a hasty decision; it also means your hard earned cash is put to work for longer. After all, as the saying goes ‘the early bird catches the worm’ and in the case of an ISA there is a whole year of potential returns to be had.

“Another option is to take the timing out of the process altogether by investing on a regular basis. Investing regularly takes the emotion out of investing: it is all too easy to have your investment decisions clouded by current sentiment or events that shouldn’t really matter if you are investing for the long-term. Investing regularly should also help to reduce market timing risk as you’ll end up with ‘pound cost averaging’, an average entry price that reflects some days when the market is up and others when it was down.”

Dust down your existing portfolio

Hollands said: “The new tax year is as good a time as any to take stock of your existing investment strategy at a time when a lot of the hype has quietened down. Rebalancing your portfolio and weeding out any underachievers should also help you identify where you should be targeting any new investments so that they will compliment your overall strategy.

“So before you invest a penny of new money, give your portfolio a ‘Spring Clean’. That should involve looking at where your asset allocation is positioned, since this may have drifted over time as returns have differed across various markets and investments, understanding how much risk you are now exposed to, and checking that each of your existing holdings still deserves a place in your portfolio.”

Tilney Bestinvest offers a free service for investors to analyse their existing portfolio: FIRST enables investors to enter details of their funds, investment trusts, ETFs and shares from drop-down menus, input the approximate value of each investment and receive free analysis to show how much Risk the portfolio is exposed to (based on its volatility), how well balanced the Asset Allocation is (against Tilney Bestinvest’s models), and a view on the Quality of each investment held. FIRST is available at www.bestinvest.co.uk/first

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Important Information:

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press release does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers.

Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change.

Press contacts:

Roisin Hynes
0207 189 2403
07966 843 699
roisin.hynes@tilneybestinvest.co.uk

Matthew Gray
0207 189 2492
matthew.gray@tilneybestinvest.co.uk

 

About Tilney

Tilney is a leading investment and financial planning firm that builds on a heritage of more than 150 years. The Tilney Group operates under the Tilney brand for Investment Management and Financial Planning and Bestinvest for execution-only investing. We look after more than £22 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including Best Fund Platform and Best SIPP Provider at the 2017 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Group employs over 1,000 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.