The Stocks & Shares ISA deadline is just days away. I reckon it’s a great investment vehicle, especially with the attractive tax implications.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Let me break down two common mistakes I’ve learnt not to make. Plus, I’ll go over one stock I’m planning on buying for my ISA as soon as I can.
Get the cash in!
The end of the tax year seems to sneak up on us every year. I know it feels like that for me.
A big issue I reckon is actually using the £20,000 allowance, and getting the money deposited in a timely manner.
My Foolish colleague Alan Oscroft recently wrote a great piece about how Hargreaves Lansdown investors rushed to fund their ISAs at the last minute, among other issues.
I’ll admit I’ve done this in the past. However, what if there are banking issues, such as my online app not working on deadline day? I could miss out.
I’d look to ensure I’m depositing regularly, and using my full allowance, if I have the cash to do so. Being safe rather than sorry is a life lesson I was taught early on. I apply this to investing in certain instances too.
Deposit now, invest later
Many investors are under the misconception that the deadline means shares must be purchased before the end of the tax year too. This is simply not the case.
Buying shares can happen at any time. The deadline is mainly about using your allowance for the tax year.
Rushed buying decisions can lead to poor investments, in my opinion. I’m a big advocate of taking my time, doing my due diligence, and ensuring I’m buying the best stocks to bolster my wealth.
One stock I’m eyeing up
From a returns and growth perspective, Lloyds Banking Group (LSE: LLOY) shares look very appealing to me.
The business has come under pressure in recent times given the volatility we’ve seen in the market. Plus, the shares haven’t moved much since the financial crash of 2008 either, never mind recent turbulence.
However, the shares look attractive on a price-to-earnings ratio of just six, and also offer a dividend yield of 6.1%. Furthermore, the business is looking to further reward investors with a series of share buyback schemes. However, I’m conscious that dividends are never guaranteed.
Naturally, there are risks involved. Continued economic volatility is a concern. Furthermore, a recent investigation by the Financial Conduct Authority (FCA) into motor finance mis-selling could lead to a large fine. This could impact returns.
I’m buoyed by Lloyds’ vital position in the banking ecosystem in the UK. A big part of this is the firm’s position as the UK’s largest mortgage lender. The housing imbalance in the UK could provide longer-term growth opportunities, which could boost performance and growth.
For me, the bullish aspects outweigh the bearish factors mentioned. This is the reason I’m drawn to the shares.
