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Early-bird ISA savers could pocket an extra £3.5k

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Savers who invest their full ISA allowance early in the tax year could benefit from a £3,500 boost to their savings pots, according to Fidelity Worldwide Investments.

The fund group crunched the numbers to find that savers who invested in May – rather than the last available day of the tax year at the start of April – were significantly better off.

Fidelity compared the positive effects of compounding on savings pots of two potential savers, who had both used their full ISA allowances each tax year since 2000 and invested in the FTSE All Share index.

Saver A, the latecomer, invested the allowance at the last minute in April each year. Saver B, the early bird, put money aside in May, one month into the tax year.

They invested exactly the same amount – but over the same period, the early-bird was more than £3,000 better off, Fidelity found.


  Amount invested in the FTSE All Share Month of the tax year End amount
SAVER A (the latecomer) £121,080 April £200,759
SAVER B (the earlybird) £121,080 May £204,246
Source: Fidelity, January 2014

 Tom Stevenson, investment director at Fidelity Worldwide Investment, said: “Many of us put off investing our tax allowances, but – unlike some of the other chores we ignore for as long as possible – getting in early can make a real difference when it comes to our ISAs.

“Investing into an ISA is not the arduous process it was years ago: you can fill in your details quickly and easily online, and there’s plenty of help to guide you in making your investment choices. The perks of being an early-bird are clear, so savers should act quickly to take advantage of the power of compounding in their portfolios.”


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