InvestEngine calculates that people who have invested at the start of the tax year since the creation of stocks and shares ISAs could be more than £36,000 better off than those who invested last minute.
The ETF investing platform calculated that even everyday investors putting aside just £1,000 per year since 1999 would be more than £5,000 better off if they had done so at the start of each tax year.
According to InvestEngine, someone who maxed out their stocks and shares ISA allowance every year since they were created in 1999 could have a pot worth £844,997 if they invested at the start of the tax year. Those who invested at the end of each tax year would typically have a pot worth £808,624 – a difference of £36,373 (4.5%).
Investing early is also beneficial for everyday investors who are unable to put away huge amounts of money into stocks and shares ISAs. InvestEngine’s calculations show that those who invested £1,000 at the start of every tax year since 1999 could have a pot worth £87,379, compared to £82,183 if they invested at the end of the tax year – a difference of £5,196 (6%).
Even those who haven’t been putting money into their stocks and shares ISA for very long can reap the benefits of investing early.
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Someone investing £1,000 earlier in the tax year over the past 10 years (since 2015) could have an ISA valued at £17,527, compared to someone investing later in the tax year, whose pot would be worth £15,097 – a difference of £2,430 (16%).
Goncalo Machado, investment manager at InvestEngine, said: “Investing in your stocks and shares ISA earlier in the tax year increases the potential for higher returns – particularly in the long run. You’ll often hear seasoned investors say that investment growth isn’t about ‘timing the market’ but ‘time in the market’.
“To make the most of your stocks and shares ISA, you should consider front-loading your contributions to give your money as much time to grow as possible. If you contribute, say, £1,000 at the start of the tax year, then that £1,000 will have the next 11 months to grow, compared to only a month if you added it to your ISA in March at the end of the tax year.”
