Early tax year ISA investors could be thousands of pounds better off, according to research* looking at the investing habits of hypothetical ISA investors over the last 10 and 20 years.
The study concludes that if you were an ‘Early Shirley’ and invested your full ISA allowance on 6 April for the past 20 tax years, you would be nearly £12,000 better off now than ‘Last Minute Lara’ - someone who had waited to invest on the last day of each tax year.
With not everyone able to afford the full ISA investment in one lump sum, investing like ‘Monthly Monty’, who drip-feeds money into an ISA with a monthly savings plan, would achieve better returns than investing it all at the last minute. By splitting your annual ISA allowance into 12 monthly investments your investment would have grown to £296,247 - still £7,496 more than if you had waited until the last minute.
Reminder - Temporary LISA Withdrawal Rule Change
Earlier this year the government announced temporary changes to the Lifetime ISA (LISA) withdrawal rules if people want to access their funds earlier due to the pandemic.
The LISA allows holders to save up to £4,000 a year towards their first home or retirement and provides a 25% cash bonus of up to £1,000 a year on top.
Previously, holders were charged 25% of the amount withdrawn if they took cash out before turning 60 or if they were not buying a property. The withdrawal charge has been reduced to 20% between 6 March 2020 and 5 April 2021.
*Fidelity International, April 2020
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.