The earlybird ISA investor catches the worm

12 April 2017
  • An estimated 45% 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 2016/17 tax year, with the final subscription for an ISA on Tilney’s Bestinvest service for online investors taking place at 11.56pm – with only four minutes to spare before the allowance disappeared for good!

Tilney estimates that around 45% of clients on its Bestinvest service invest in an ISA in the last three months of the tax year, a large chunk of which do so in the last fortnight.  In contrast, around 27% of Bestinvest’s clients were ‘early birds’ who began investing in April 2016.

Jason Hollands, Managing Director at Tilney Group, which runs the Bestinvest service, said: “It is human nature to leave things until the last minute. Last week saw the traditional annual tax-year end stampede of applications for ISAs and pensions; with some only utilising these precious long-term allowances on the final evening of the tax year. 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 some people to wait until the very final hours in a kind of game of Russian Roulette with their tax allowances.”

Data shows that in fourteen of the last twenty years (April to end of March), the FTSE All Share Index delivered a positive return. This means that statistically, the odds are that the earlier you invest in the new tax year, the better.

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 – and potentially less tax paid as well.

“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 concluded: “The new tax year is also 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 complement your overall strategy.”


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.

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.