Every year in April there is a surge of interest in Stocks and Shares ISAs. Once the deadline for contributions passes for another year, many peoples’ minds drift elsewhere and ISAs are not a priority again for another 12 months.
But I do not imagine that top investors like Warren Buffett let their stock market activity be driven by arbitrary deadlines.
Instead, billionaires like Buffett tend to look for value whenever they can find it.
Drawing a leaf from that book, I am not waiting until April to think about my Stocks and Shares ISA as a vehicle for possible wealth accumulation. I think the perfect time to think about that is right now!
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Why wait?
Acting now has some practical benefits, in my view.
It reduces the risk that a delay or administrative error means I miss this year’s ISA deadline when it comes, compared to waiting until the last moment.
It might also mean I can invest cash that is sitting spare now, but that could otherwise have been spent elsewhere come the start of April.
Pouncing on value
Not only that, but it means I can put my money to work sooner, which might help me build wealth sooner too.
For example, I own shares in British American Tobacco. The FTSE 100 share, with its 9.8% dividend yield, is set to start trading ex-dividend for the quarterly payout on 23 March.
That means that if I bought more of the shares now, I would earn that dividend on them. If I wait until the start of April, I would miss it (though I would be entitled to any future dividends).
But I also think now happens to be a great time for me to invest, because there are some bargain shares that might not be as cheap a few months from now.
Long-term outlook
No-one knows for sure what will happen in the stock market in the future.
But consider one share I already own, JD Sports (LSE: JD). Over the long term it has performed well. The shares are 21% higher than five years ago even after falling 28% over the past year.
A lot of that recent tumble is due to a profit warning this month.
Slowing consumer spending clearly poses a risk to sales and profits at the sportswear retailer. But it still expects full-year profit before tax and adjusted items of £915m–£935m. Compared to that, its market capitalisation of under £6bn looks dirt cheap to me.
I think JD’s strong brand, large and expanding store network, as well as digital footprint are all significant assets.
A share price fall of 32% since the start of this month looks overdone to me. This week saw three different directors, including the firm’s chief executive, dipping into their own pockets to buy shares.
If I had spare cash in my Stocks and Shares ISA right now, I would do the same.
Why wait to snap up what I see as a bargain when I do not know how long it will last?
