The Stocks and Shares ISA deadline is 5 April. Even though we haven’t hit January yet, it’s good to start thinking about it now. It does pay to think about how I can get a head start as far as the new financial year’s investing is concerned.
Managing cash flow for the ISA
Before I get to my points, it’s important to understand why I’m bothered about my ISA at all. The ISA is a product that allows me to invest £20,000 a year (running April to April). Any stocks bought and sold within the ISA are exempt from capital gains tax. I pay no tax on my dividends either.
The first thing I need to do is plan out my cash flow for the next couple of months. I want to try and see how much spare cash I think I’ll have accumulated by the end of Q1. The reason for this is that I can then estimate how much money I can put in my Stocks and Shares ISA before the deadline.
I want to make it clear that I’m not one of those people that sees the £20,000 annual ISA limit as a must-reach target. It doesn’t matter if I’ve used £1,000 or £10,000 of my allocation so far. But the point is that after April, I can’t go back on the unused allocation from the previous year. So if I have spare cash due in coming months, I may as well add it to my ISA before the deadline.
Putting the money to work
The second point leads on from this. There’s no pressure to invest that money straight away in the ISA. But where I can get a head start on now is looking at what stocks would make my portfolio better. That way, I can snap up an opportunity when it presents itself.
For example, I might note that I don’t have many dividend stocks at the moment. I could then make a list of a few of my favourites, and be on the lookout to buy shares if I see a short-term dip.
Planning now for potential scenarios
The third point I need to be aware of is potential volatility post-April. The market is an uncertain place right now, with Omicron, rising interest rates and a China slowdown all making the picture murky. These issues are unlikely to be fully resolved before the Stocks and Shares ISA deadline.
So I can get ahead of this by looking to add defensive stocks to my portfolio before April. These include supermarkets, utility provides, insurance companies and others. Buying stocks like these should help to protect my existing ISA portfolio in case we see the above issues flare up soon.
I think the next few months are going to fly by. Therefore, planning some points for my Stocks and Shares ISA now should help me to be more organised come April.
