The best way to grow your money is to give it more time.
Even the choice between doing your ISA at start of the tax year versus the end, can make a surprising difference.
It might seem obvious. You get an extra year of growth, every time you add money to your ISA. The effect is subtle at first, but over the course of decades, it can add up to massive amounts.
The reason starting early works is, in part, thanks to the power of compounding.
Your money grows, by earning returns on your initial investment and returns you've already made. It’s a snowball effect that accelerates over time, exponentially boosting your wealth in the long run.
And the beauty is, it takes barely any effort. Just starting early, consistency and patience.
This article isn’t personal advice. Remember, investments and any income from them can rise and fall in value, so you could get back less than you invest. ISA and tax rules can change, and benefits depend on individual circumstances. Past performance isn’t a guide to the future. If you’re not sure if an investment’s right for you, ask for financial advice.
Investing on the first day versus the last day matters
We’ve looked at the return from investing £5,000 each tax year in the UK stock market since Stocks and Shares ISAs launched in April 1999.
One invests on the first working day of the tax year, the other on the last working day. The same £125,000 has been invested over that time for both.
Whichever option you took, you’d have done very well. But you’d have £18,115 more by investing at the start of each tax year.
That’s over three years’ worth of their ISA subscriptions better off.
Investing on the first or last day of the tax year
Get started and use your ISA allowance today
It’s easy to second guess when to invest. Trying to pick the right time.
Truth is, nobody knows if the stock market will go up or down tomorrow. Or the next day. So, remember it’s time in the market not timing the market.
And for that reason, there’s no time better time than today to use your ISA allowance. The sooner you get started, the more you can benefit from compound growth.
Once you’ve read all the important information, you can open your new ISA in under five minutes online. All you need is your debit card and National Insurance number to hand.
Why not make it the next thing you do?
If you have any questions about ISAs, please don’t hesitate to call us on 0117 900 9000.
Looking for investment ideas for a Stocks and Shares ISA?
Here are three funds to help diversify your ISA portfolio.