The Easter Bunny will be arriving early this year as Easter Sunday is on 1st April. Whether you’re hunting for eggs or just taking some time out with the family, the long weekend may just present you with some free time to review your finances and consider making a last-minute Individual Savings Account (ISA) investment before the 2017/18 tax year ends. Human nature being what it is, March and April is peak time for ISA investments – call it a ‘last chance saloon’, if you like.
If you don’t use your ISA allowance for this tax year, it’s gone for good – you can’t carry it forward to next year. And, this really is a very generous tax allowance, so let’s recap the key points:
Whilst an ISA makes total sense for tax-free investing, your decision to invest needs careful planning. There’s little point in buying shares by 5 April purely because that’s when the tax year ends. Stock markets were buoyant throughout 2017, but there’s no guarantee that they will continue to forge ahead, as February’s market correction demonstrated. If you’re investing a lump sum, then timing is crucial. You also need to think about your long-term investment objectives. If you have cash available but are uncertain about your choice of investments (or the timing) it’s a very good idea to consider taking advice from an expert that will be able to steer you. If you don’t already have one, you can find a directory of local advisers by visiting www.unbiased.co.uk
Whether you’re using the services of an adviser or making your own investment decisions, diversification matters – don’t put all your eggs in the one basket. You should aim for a portfolio that offers you exposure to a range of different types of asset classes. And, as already highlighted,
your ISA is just the wrapper in which you hold your investments, so remember that you can diversify your portfolio by holding multiple investments within the one account.
It’s wise to be aware of the generous tax breaks that ISAs offer but it’s just as vital that you invest in the right investments at the right time. If you’re uncertain about the timing of your share purchases, it could be worthwhile considering investing on a monthly basis – and riding out the peaks and troughs of the market. Many platforms offer a regular savings facility, some from as little as £50 a month.
Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information.