It always pays to be prepared. But when it comes to managing your money, planning and preparing for the future is essential to ensure that you don’t get caught out by any negative surprises.
That’s why I always start planning out what I’m going to do with my ISA in the next financial year before it begins.
Planning for the future
Planning for the 2019 financial year already might appear excessive at first, but by preparing in advance, I can make sure I’m not caught in a sudden rush to get everything sorted before the deadline comes around. It also means that by having money to invest as soon as the new ISA allowance comes into force, I can make the most of the tax benefits available from an ISA wrapper.
Any income from investments held within an ISA is tax-free — you don’t even need to declare the income on your tax return, which makes it an especially attractive investment account for higher-rate taxpayers.
Time to start saving
I’m planning to start saving for my 2019 ISA at the beginning of 2019. Even though the new allowance doesn’t kick in until 5 April, three additional months of preparation and saving gives me plenty of time to prepare and be ready to contribute as much as possible to my new ISA allowance when it kicks in at the beginning of the 2019/2020 tax year.
I think it’s always best to save as much as possible when you can afford to. This way, you might find yourself in a precarious position if your financial situation changes. By making the most of any tax-free allowance as soon as possible, and planning out contributions for the rest of the year, I hope to improve my financial situation and make sure I don’t end up in a position where I have to draw down on my savings to pay the bills.
Don’t come unstuck
The four-week period over Christmas tends to be the time when most people come unstuck with their saving and budgeting plans, which usually has a knock-on effect on the rest of the year.
So, by getting a savings plan in place for the first few months of 2019, as well a budget for the Christmas period, you can put your finances on track for a healthy 2019.
Where’s the best place to invest your Stocks and Shares ISA in the current environment? My money is on the FTSE 100. As I’ve written before, this blue-chip index gives investors an instantly diversified dividend portfolio, with an average dividend yield of 4.3%, at the time of writing.
Also, around two-thirds of FTSE 100 constituent profits come from outside of the UK, so if you’re worried about the impact Brexit might have on your portfolio, the FTSE 100 could prove to be a safe harbour in stormy waters.
