New research reveals Gen Z may be the savviest generation when it comes to credit cards. This age group is the most likely to take advantage of 0% balance transfer and money transfer deals.

So, what else does the data reveal about credit card usage in the UK? Let’s take a look.

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How does Gen Z use credit cards?

According to MoneySuperMarket, members of Gen Z – those born between 1997 and 2012 – may be the most astute when it comes to credit cards. That’s because research from the price comparison website reveals members of this generation who avoid having to pay credit card interest are the most likely group to make use of 0% balance transfer and money transfer offers.

According to the research, 32% of Gen Z’ers who don’t pay credit card interest take advantage of 0% balance transfer credit cards. Meanwhile, 36% of the same group make use of 0% money transfer credit cards.

In stark contrast, 85% of older credit card customers – aged 65 and over – who avoid having to pay credit card interest simply clear their balance in full each month. While there’s nothing wrong with this, especially for those with a reward credit card, it does suggest older groups aren’t exploiting lengthy interest-free periods like their younger counterparts.

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Using credit cards correctly

While credit cards have the power to harm finances when used incorrectly, using plastic to borrow or shift debt to 0% is an excellent way to use them to your advantage.

Jo Thornhill, money expert at MoneySuperMarket, explains this in more detail: “With the cost of living crisis becoming a growing concern, it’s time for us all to make sure we’re getting the best out of our personal finances. It starts with how we manage credit cards. When used carefully, credit cards can be a great way of helping to spread the cost of purchases and can help you get on top of your finances. However, too many Brits are paying interest on their cards when they needn’t be – particularly when there are so many good deals out there in the market.”

Thornhill goes on to explain the benefits of shifting debt to a 0% balance transfer credit card.

She explains: “Balance transfer cards are a great option for those looking to clear their debt. With this type of credit card, you can transfer your existing balances onto one low or 0% rate card, consolidating your debt all in one place at a lower interest rate. By transferring to a 0% rate card, you could also avoid paying interest for up to two years. Just be careful when it comes to the end of your interest-free period though, as you could end up paying much higher charges.”

To learn more about using plastic responsibly, take a look at our article that explains how to use credit cards the right way.

What else does the research reveal?

In addition to highlighting the credit card habits of Gen Z, the research also highlights the fact that over half of credit card users have an outstanding balance. Of this group, a third pay interest, with the average interest payment standing at a whopping £121.40 a month. That’s equivalent to £1,456.80 a year.

Among credit card users who don’t pay any interest, 68% clear their balance in full every month. Perhaps surprisingly, less than a third (31%) say they make use of credit card deals. 

Another interesting stat from the research is that those aged 35 to 44 are the most likely to have outstanding credit card debt. The average credit card balance among this age group is £1,091.80. 

To learn more about borrowing on plastic, take a look at the Motley Fool’s guide to the different types of credit cards.

The post Revealed! Why Gen Z may be the savviest generation when it comes to credit cards appeared first on The Motley Fool UK.

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One of the world’s biggest banks has suggested the chances of a recession in the UK are ‘on the rise’.

So, given this latest warning, should investors worry about their assets? Or is it worth taking a more optimistic view? Let’s take a look.

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What is a recession?

A recession is generally defined as negative economic growth in two successive quarters. ‘Growth’ is measured in terms of Gross Domestic Product (GDP). This refers to the total output of the country. In other words, it’s the number of finished goods and services produced.

The UK last entered a recession in April 2020 as a result of the emergence of the Covid-19 pandemic. During that time the economy experienced steep falls in GDP. In Q1 of 2020, UK economic output fell 2.2%, while in Q2, GDP plummeted 20.4%.

Why is the risk of a recession on the rise?

This week, Deutsche Bank revealed that it expects the UK economy to shrink by 0.2% between April and June. After this period, the bank suggests the UK economy will then rebound.

Deutsche Bank points to rising household energy bills as one reason why it expects the economy to ‘flatline’ towards the end of 2022. So, while the Bank doesn’t specifically expect the UK to fall into recession this year, it does suggest that the possibility of a recession is rising.

Deutsche Bank’s chief economist, Sanjay Raja, explains: “We continue to think that the risk of recession remains on the rise. This is something we will be tracking very closely in the coming months. Consumer confidence data is already consistent with recessionary levels.”

Following the latest prediction of the German Bank, PricewaterhouseCoopers (PWC) has also recently suggested that UK economic growth is expected to drop to 3.8% this year. The professional services firm previously suggested a growth figure of 4.5% and points to the war in Ukraine as the reason behind its revised figure.

Interestingly, PWC also says that economic sanctions placed on Russia as a result of the war have made it reassess its UK inflation figure. The UK inflation rate already stands at a 30-year high of 6.2%, and PWC expects it to hit 8.2% during the current quarter of the year.

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Should investors worry about a possible recession?

Job losses, reduced economic output and a fall in consumer spending are all typical symptoms of a recession. Unsurprisingly, these factors can have a big knock-on impact on stock prices.

For this reason, stock prices usually plummet during a recession. Volatile price swings also become commonplace during such times as investors react to emerging news. 

For some investors, a recession is too much to bear. This is why some may opt to sell their shares during a significant fall in GDP. However, investors who act in this way are unlikely to possess a ‘buy and hold‘ investing mindset.

Any investor who sells shares during a recession is at risk of crystallising losses, as they won’t benefit from any quick market recovery that may occur. For this reason, it’s a strategy that is rarely recommended among the wisest of investors.

It’s also the reason why investors shouldn’t really worry about an impending recession. It’s impossible to know for sure which asset classes will respond well in a recession. Selling shares by reacting to new risks is a strategy that could easily get investors into trouble. 

Are you looking to invest? If you’re looking to get involved in the stock market, take a look at The Motley Fool’s top-rated share dealing accounts. If you’re a newbie, also read our investing basics guide, which can help you avoid common investing mistakes.

The post Recession risk ‘on the rise’: is it time for investors to worry? appeared first on The Motley Fool UK.

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New research reveals that the current cost of living crisis is forcing many to cut back on their investment contributions.

Let’s take a closer look at what the findings tell us about current investing habits.

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What does the research show about investors and the rising cost of living?

According to the survey by Interactive Investor, a number of investors are cutting back on regular investment contributions in order to tackle the cost of living crisis. 

24% of respondents replied ‘yes’ when asked whether they have stopped contributing to any investments or savings because of the rising cost of living.

This tells us that many are scaling back on their investments simply to cope with rising bills. Dubbed ‘Awful April’, millions of people are facing higher National Insurance, energy, mobile phone and broadband contracts this month.

What else does the research reveal?

The survey also reveals that stocks and shares ISAs were the most common investment product that investors cut back on. Of those responding to the survey, 8.5% say they’d scaled back on payments to their tax-efficient investing account.

Meanwhile, 5% have stopped contributing to their pension, 5% have cut regular payments to their savings accounts and 4.5% have halted contributions to a general investing account. Interestingly, only 1% say they’ve stopped contributing to their children’s junior ISA. 

So, while one in four are cutting back, it’s still a fact that many continue to make regular contributions. This is something that Becky O’Connor, head of pensions and savings at Interactive Investor, describes as ‘heartening’. She explains: “It’s heartening that most people appear to be persisting with their long-term investments despite the soaring cost of living.

“However almost one in four have already made some cuts to their usual ISA, pension or investment account contributions, which is a significant proportion. This may be an indicator of how bad things have already become, as well as how high people expect living costs to go over the coming months.”

O’Connor goes on to explain that it makes sense that some investors are having to reduce their contributions. She explains: “It’s understandable given the current outlook for household budgets – as well as the knowledge that things will most likely get worse before they get better – that people are looking to make cutbacks wherever they can.”

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Should you cut back on investments?

Cutting back on investing contributions isn’t something to take lightly. That’s because taking such action could put a spanner in any financial goals or dreams of retiring early. Instead, a better option is to try to cut back on non-essential spending, if at all possible. 

Thinking very carefully before cutting back on investments is a sentiment echoed by Interactive Investor’s Becky O’Connor. She explains: “It’s important not to cancel long-term investments on a whim and to look at other possible areas to roll back on first. Future financial security is important and in cutting back on things like pension contributions now, people may be storing up difficulties for the future.”

Of course, not everyone will be in the fortunate position to be able to cut back on frivolous spending. After all, even the Bank of England has suggested the UK population facing the biggest squeeze on living standards since the 1970s. So, if you feel the need to cut back on contributions, it’s certainly nothing to be ashamed of.

However, cutting back on contributors may not even be enough for some. If that includes you, then you may be considering selling shares. Again, this action shouldn’t be done on a whim. However, if it is something you wish to consider, take a look at our recent article that explains how to sell shares.

For more investing need-to-knows, take a look at The Motley Fool’s investing basics guide.

The post 1 in 4 cutting back on investments amid cost of living crisis appeared first on The Motley Fool UK.

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Last week, it was revealed that UK credit card borrowing has hit record levels. The news has seemingly shone a light on current lending laws. That’s because a leading consumer group now suggests it’s time to amend existing APR rules.

Let’s take a closer look at what this all means for credit card applicants.

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What’s the deal with credit card APRs?

The annual percentage rate (APR) refers to the annual interest charged to borrowers on credit cards and other types of credit.

In 2011, the UK aligned its borrowing rules with the rest of Europe. Since then, lenders have been able to advertise representative APRs as long as 51% of applicants get that rate.

For example, if a credit card’s representative APR is 9.9%, at least 51% of applicants must be awarded this rate. However, under the current rules, there’s nothing stopping lenders from charging 49% of borrowers a much higher rate of interest.

Unless approved using a credit card eligibility checker, applicants often don’t have the opportunity to see the rate they’ll be awarded before applying. So, if a credit card customer applies for a card because of its low advertised representative APR, and then discovers they’re given a much higher rate of interest, there’s not much they can do about it.

Importantly every credit card application is recorded on your credit file. So, applying for an alternative card after rejecting an unexpectedly high APR is often not the wisest of moves. 

Why are there calls for changes to APRs?

According to Martin Lewis, founder of MoneySavingExpert, “The fact so many people can be charged more than the rate advertised is demoralising and often financially dangerous. Many only find out once they’ve applied, leaving a negative mark against their file – forcing many into accepting the higher rate, or making it harder to find a cheaper deal elsewhere.

“For years we’ve railed against this, and now we have a golden opportunity for change. We are told there will be a Brexit dividend – well, this change was caused by EU harmonisation, so I’m asking the Government to deliver on this one. Lenders tend to make most of their profits ‘from the tail’ – those people who get charged higher rates – and often they’re the ones with weaker finances. They need protecting.”

Lewis goes on to highlight that current APR rules don’t help those already struggling with rising costs. He also suggests the UK should revert to pre-2011 APR rules, replacing ‘representative APR’ with ‘typical APR’. This would mean at least 66% of applicants would have to be given the advertised interest rate. 

He continues: “We can’t give consumers a crystal ball, but we can at least make it so they needn’t take such a stab in the dark. Reverting to typical rates will improve fairness and transparency, as well as helping to protect people’s credit files. Taken together, this should reduce the financial and emotional harms the current system causes.”

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What’s the likelihood of changes?

Chancellor Rishi Sunak has indicated that he is behind APR rule changes.

Commenting on the consumer campaign, Sunak says he will ask the Financial Conduct Authority (FCA) to look at the current rules. He said: “It is important that advertised APRs reflect the rate the consumer is likely to receive. I welcome the report by MoneySavingExpert looking at ways that this could be improved, and will ask the FCA to assess the merits of reform in this area.”

Of course, while fairer consumer rules may be welcomed, the representative APR shouldn’t matter if you use 0% cards correctly. That’s because you can avoid interest entirely with 0% cards, as long as you clear them within the 0% period. 

For more on this, take a look at our recent article that explains how to use credit cards the right way.

Are you looking for a credit card? Regardless of whether APR rule changes come into play, if you’re looking for a credit card, then take a look at The Motley Fool’s top-rated 0% purchase credit cards. 

The post Calls for more credit card applicants to be given advertised interest rate appeared first on The Motley Fool UK.

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In March, it was revealed that balance transfer deals have sweetened thanks to longer interest-free periods and lower fees. As a result, now really is a great time to shift any credit card debt you have to 0%.

But what if you get a new balance transfer deal only to discover you’ve been given a miserly credit limit? Let’s take a closer look.

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Balance transfer credit cards: how do they work?

Before we take a look at credit limits, it’s worth understanding what balance transfer credit cards actually do.

Put simply, a 0% balance transfer credit card allows you to shift credit card debt to it to reduce the amount of interest you pay to zero for a limited period. So, if you have debts on an existing credit card, you can sign up for a new 0% balance transfer credit card and transfer across debt from your old card.

Do this and you’ll owe your new balance transfer card instead of your old card. Importantly, your new card will be at 0%. This means anything you move over will be interest free for the entire duration of the 0% period.

Let’s take a real-world example. Say you have £5,000 of credit card debt on a bog-standard credit card with a typical APR of 39.9%. This means you’ll be paying interest on this card to the tune of £1,995 a year. However, if you transfer this debt to your new 0% balance transfer credit card, then the interest you pay will drop to zero for the duration of the 0% deal. 

So, if you manage to clear your balance before the 0% period ends on your new card, then you can wipe your debts without paying interest.

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What balance transfer credit cards are available right now?

Right now, the longest 0% balance transfer length is 33 months via HSBC. While it’s a very generous 0% offering, anything you transfer to the card incurs a 2.7% fee. Plus, to get the 0% deal you must shift your debt within 60 days of getting the card. The card’s representative APR is 21.9%. 

If you’d prefer a card without a transfer fee, then Santander offers the longest no-fee card that’s open to all. It offers a hefty 21 months at 0% and has a representative APR of 20.9%.

As an added bonus, the card also gives three months’ 0% on new spending. However, if you want a card for spending, there are more generous 0% purchase credit cards out there. 

For more options, take a look at The Motley Fool’s top-rated 0% balance transfer credit cards.

What should you do if you’re given a low credit limit?

If you’re accepted for a 0% balance transfer credit card, you’ll be given a 0% period and credit limit to go with it. Importantly, some balance transfer cards give borrowers with poorer credit scores a shorter 0% period. It’s wise to use a credit card eligibility checker before applying because some cards might pre-approve you, giving you a guaranteed deal.

The credit limit you’re offered will be influenced by your credit score, as well as other variables such as your credit utilisation ratio.

This means that if you apply for a new balance transfer card, then you could be offered a low credit limit. This can be problematic, especially if the limit is lower than the amount of debt you plan to shift across. 

However, if this happens, it doesn’t mean you should disregard the deal you’re offered. It could be better to use the limit you’re given and then consider applying for another card to transfer your remaining debt.

By doing this, you won’t have needlessly wasted a credit card application. Remember, every time you apply for a credit card, it is recorded on your credit file. Too many applications in a short space of time can harm your credit score.

Of course, if you are given a low limit, there’s every chance you’ll be rejected for another card. If this happens, then you may have no other choice but to continue paying interest on your existing card. However, as you’ll have managed to transfer some of your debt, you should still be in a better position than if you hadn’t applied for any new cards.

For more debt-shifting tips, take a look at our article that explores the dos and don’ts of balance transfer credit cards.

The post Balance transfer deals improve: here’s what you should do if given a low credit limit appeared first on The Motley Fool UK.

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Earlier this week, it was revealed that Elon Musk has been buying Twitter shares like there’s no tomorrow. The eccentric billionaire is now the social media platform’s biggest shareholder. 

So, what else do we know about Musk’s interest in Twitter? And why does his recent investment choice matter? Let’s take a look.

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Who is Elon Musk?

Elon Musk is an engineer and technology entrepreneur best known for his involvement in PayPal, SpaceX, DeepMind Technologies, Tesla and The Boring Company.

Recent estimates suggest the South African is worth over $260 billion (£200 billion), making him the world’s richest person.

Unlike some other billionaires, Musk is typically outspoken and is very much a media personality. From suggesting humans will soon live on Mars and presenting the prime-time US TV show Saturday Night Live to sparking controversy on the world’s biggest podcast, Musk’s name is never far from the headlines.

What do we know about Musk’s stake in Twitter?

It has been revealed that Elon Musk has been ‘passively’ purchasing Twitter shares. The billionaire currently owns 73.5 million shares in the social media platform, which is equivalent to a 9.2% stake in the company. Musk’s holding now makes him Twitter’s largest shareholder.

Following the news, the social media giant has announced Musk will join Twitter’s board as a Class II director.

Twitter CEO Parag Agrawal welcomed Musk to his new role. He said: “Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board.

“He’s both a passionate believer and intense critic of the service, which is exactly what we need on Twitter, and in the boardroom, to make us stronger in the long term. Welcome, Elon!”

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Why does Elon Musk’s big Twitter stake matter?

Elon Musk is a prolific user of Twitter. He regularly shares his thoughts, opinions and concerns with his 80 million followers. While a popular personality, some of Musk’s critics have accused him of market manipulation in the past, following his Tweets commenting on the future of his Tesla organisation.

Despite the fact that not everyone is a fan, it’s fair to say that Musk remains a fan of Twitter. It could also be said that his recent purchase of millions of shares suggests he thinks the platform still has room to grow.

The markets clearly agree. Following the revelation that Musk has been buying Twitter shares, the social media’s share price rocketed by 30%. This has led to Musk’s stake alone soaring by $3 billion.

One Twitter share now stands at $50.77 as of Thursday 7 April. Interestingly, it has remained more or less at this level since news broke about Musk’s significant holding.

What are the concerns about Musk buying Twitter shares?

Despite helping the Twitter share price to skyrocket, some users are far from happy about Musk’s latest investment decision. That’s because Musk has previously suggested Twitter should allow more free speech. This could suggest the billionaire wants to relax its existing censorship rules. Musk has even previously suggested that he might set up his own social media platform.

Other critics have also expressed concern about Musk wanting to further increase his stake in Twitter to have more of an influence on how the company is run. However, it’s worth knowing that his agreement to join the board limits the number of shares he can buy. That’s because, under the agreement, Musk cannot hold more than 14.9% of outstanding Twitter stock during his term, and for 90 days after.

How can you buy shares in Twitter?

Twitter Inc is listed on the New York Stock Exchange. So, if you wish to buy shares in the company, then you’ll have to do so through a share dealing account that allows you to buy US stocks. IG and Saxo Markets are two providers that allow this.

Bear in mind that when it comes to buying US shares, you’ll have to complete a W-8BEN form to cover US taxes. 

As with any investing, remember that the value of your investment can fall as well as rise. For more need-to-knows, take a look at our investing basics guide.

The post Elon Musk has been buying Twitter shares: here’s why it matters appeared first on The Motley Fool UK.

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A leading investment platform received 100,000 more visitors to its website during the last week of the 2021/22 tax year compared to the same time a year ago.

So, with the number of investors seemingly on the rise, what should beginner investors take into account before entering the stock market? Let’s take a look.

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How is the number of investors rising?

According to Hargreaves Lansdown, there were 2.4 million visits to its website during the last week of the tax year. This compares to 2.39 million visits during the same period a year ago.

So, this 100,000 rise tells us two things:

1. The number of people looking to invest their wealth is rising. This is perhaps not surprising, given that interest rates on savings accounts are pitiful right now.
2. Investors are more aware of the importance of making use of their annual ISA allowance.

To learn more about why the ISA allowance is important, take a look at our article that explains what a stocks and shares ISA is and how it works.

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What do beginner investors need to know?

With data suggesting the number of investors is on the rise, Lorna Kapusta, head of customer engagement at Fidelity Investments, has highlighted three key tips that newbies should keep in mind before entering the world of investing.

1. It’s never too late to start investing

While older investors may have a more risk-averse attitude to investing, as long as you have your health, then understand that it’s never too late to invest.

As the famous Chinese proverb goes: “The best time to plant a tree was 20 years ago. The second best time is now.”

2. You don’t need a lot to invest

It’s a common myth that you need to be wealthy or have a big lump sum in order to start investing. Thankfully, this couldn’t be further from the truth. 

Even if you only have a small amount to invest, it still makes sense to invest. For example, even a £25 monthly investment will equate to an annual contribution of £300. 

If you do start small, remember that you can always increase your regular contributions as and when your financial situation allows.

3. Have a goal and stick to it

When it comes to investing, or even saving for that matter, it’s important to know why you are putting away money in the first place. So, whether you’re investing for your later years, your children’s university costs or for a major purchase, it’s worth keeping your goal at the front of your mind.

As Fidelity’s Lorna Kapusta explains: “When you have a goal for your money, it is easier to commit and stick with it.”

What else should beginner investors know about investing?

Beginner investors should understand that the waters of the stock market can be choppy. Markets can rise and fall, and they can sometimes crash.

As a result, the number one need-to-know when it comes to investing is that your capital is at risk. However, investors with a long-term horizon are often in a strong position to cope with any falls. This is partly the reason why the Motley Fool advocates a ‘buy and hold‘ investing mindset. 

For more newbie investing tips, take a look at our extensive investing basics guide. The guide lists common mistakes to avoid when it comes to investing, which can give you the best possible head start.

Are you looking to invest? If you’re ready to invest, take a look at our top-rated share dealing accounts. 

The post Investing is on the rise: 3 need-to-knows for beginner investors appeared first on The Motley Fool UK.

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• Why is everyone buying GSK shares?

The 2022/23 tax year has officially begun. This means every adult in the UK now has a brand new £20,000 ISA allowance to use by 5 April 2023.

But is there any need to rush to use up your allowance? Let’s take a look at the pros and cons.

[top_pitch]

What’s the deal with the ISA allowance?

The annual ISA tax-free allowance refers to the amount you can stash in an ISA over the course of a single tax year. Since the 2017/18 tax year, the annual limit has been frozen at £20,000.

Importantly, any money in an ISA stays tax free year after year. This means you don’t have to pay tax on any interest or returns you earn.

As cash ISAs typically pay lower interest than normal savings accounts, and the fact that most savers don’t have to pay tax on their gains due to the Personal Savings Allowance, cash ISAs are no longer as attractive as they once were.

However, for investors, it’s a different story. That’s because pretty much any investing account can be held within a stocks and shares ISA. So, it’s wise to see them as normal investing accounts but with the added bonus of tax-free returns.

Should you use your stocks and shares ISA allowance straight away?

Given the new tax year is here, you may be wondering when you should use up your annual ISA allowance for 2022/23. Is it worth drip-feeding in a set amount every month? Or is it better to put £20,000 into a stocks and shares ISA in one go?

To answer these questions, it’s worth taking into account that research shows that ‘early bird’ investors could find themselves better off (by as much as £30,000). That’s because by investing early your wealth has longer to grow. 

Not only does investing sooner rather than later give your investment more time to grow, but it also gives you longer to benefit from the effects of compound interest. This refers to interest (or returns) earned on previous interest that can soon add up.

Despite this, however, it’s important to understand that using your ISA allowance could backfire should markets take a turn for the worse in the future. For example, if you happen to invest the full ISA allowance this week and markets fall in a few days’ time, then you could have been much better off by waiting to invest, or by taking a drip-feeding approach.

However, it’s worth pointing out that bear markets can rarely be predicted. So, while you may kick yourself if you invest just before markets fall, you’d only be doing so thanks to the benefit of hindsight. 

When it comes to investing, it’s best to leave hindsight at the door. However, if you’d struggle to cope with the psychological impact of investing a huge sum right before markets slump, then a drip-feeding approach could be the most suitable investing strategy for you, even if just for the sake of your emotional wellbeing.

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How can you open a stocks and shares ISA?

If you’re looking to invest in an ISA for the 2022/23 tax year, take a look at The Motley Fool’s top-rated stocks and shares ISAs. It’s a good idea to opt for an account with low fees in order to maximise your overall returns. Hargreaves Lansdown is a popular pick for this reason, but do also compare other accounts.

If you’re new to investing, take a look at our investing basics. This guide lists common investing mistakes to avoid and it’s a good first port of call to learn more about the stock market.

Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor 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.

The post New tax year: is it worth using your stocks and shares ISA allowance straight away? appeared first on The Motley Fool UK.

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• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?

New data reveals many investors made a last-minute sprint to open or add to a stocks and shares ISA on the final day of the 2021/22 tax year. 

So, is waiting until the last minute to use up your annual ISA allowance a wise move? Let’s take a look.

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What is significant about the end of the tax year?

Every year, on 5 April, the tax year comes to an end. On 6 April, a new one begins.

In personal finance circles, these dates are significant as the end of the tax year also signifies the end of the annual ISA allowance. For the 2021/22 tax year, which ended on Tuesday, the ISA allowance was £20,000.

Any investor who didn’t use their full allowance in 2021/22 won’t have another opportunity to do so. This is due to the nature of how ISAs work. As a result, this ‘use it or lose it’ rule means investors are often tempted to act before 6 April.

To learn more about the annual ISA allowance, see our article that explains what stocks and shares ISA are, and how they work.

What did the data reveal about ISAs opened on 5 April?

Fresh data from Hargreaves Lansdown reveals a stocks and shares ISA was opened or topped up on its platform every SEVEN seconds between 11pm and midnight on Tuesday 5 April.

The investing platform revealed that the busiest time for account activity was between the hours of 10pm and 11pm. During this time, investors were stashing cash into an ISA every 4.5 seconds.

Meanwhile, the investing platform revealed it had 2.4 million visits to its website during the final week of the tax year. Interestingly, this was 100,000 more than a year ago.

It’s worth knowing that when it comes to using your ISA allowance, you don’t necessarily have to invest the full £20,000 before the ISA deadline. Instead, you can transfer money across to a stocks and shares ISA and leave it in cash. As long as your money is in the account, it still counts towards your annual allowance. 

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, explains that almost a third of its clients took advantage of this rule. She explains: “We saw a big uplift in the number of people who chose to secure their ISA allowance without having to make an immediate decision about their investment. Some 31% of people parked their allowance in cash, and will decide where to invest once the outlook is clearer.”

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Is it wise to use up your ISA allowance on the final day of the tax year?

Investors who successfully added to their ISAs on the final day of the tax year won’t win any prizes for punctuality. That said, these investors will now be safe in the knowledge that any returns delivered from their investment will remain tax-free, year after year.

Despite this, however, it can often be a good idea to act well ahead of ISA deadline day. Hargreaves Lansdown’s Sarah Coles explains why: “If you’re still recovering from the drama of the last-minute ISA dash, don’t be tempted to put your feet up until the next race for the deadline.

“The beginning of the tax year is by far the best time to take advantage of your new ISA allowance, whether as a lump sum, or by setting up a regular investment, through a direct debit, so you take advantage of pound/cost averaging.”

Coles goes on to highlight how using your 2022/23 ISA allowance sooner rather than later will leave you in a better position to benefit from any stock market gains.

She explains “Getting it sorted now means your investments will be sheltered from tax straight away and positioned to take advantage of any share price rises. Someone who invested on the first day of the tax year every year for the past decade would have seen their investments grow almost £20,000 larger than those who invested exactly the same amount – but on the last day of the tax year.

“Not only that, but when other investors are doing the last-minute dash in April 2023, you can relax, safe in the knowledge you’ve already spent a year doing the right thing.”

Are you looking to open an ISA for the 2022/23 tax year?

The 2022/23 tax year gives you a brand new £20,000 ISA allowance.

So, if you’re keen to use it, take a look at The Motley Fool’s top-rated stocks and shares ISAs.

Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor 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.

The post ISA dash: how investors rushed to open a stocks and shares ISA on deadline day appeared first on The Motley Fool UK.

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New data reveals the five most popular exchange-traded funds so far in 2022.

Interestingly, the data suggests investors have been eager to gain exposure to a wide range of sectors this year. Let’s take a closer look.

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What is an ETF?

An exchange-traded fund (ETF) is an investment product that can track a share index, such as the FTSE 100. Other ETFs may track the price of a particular sector or another type of asset.

ETFs can be bought and sold on a stock exchange, and they are popular among passive investors. That’s because they’re often considered an easy and cheap way to gain exposure to a large number of shares.

What ETFs have investors been buying recently?

According to Hargreaves Lansdown, these are the most popular ETFs among investors in 2022 (so far). 

• Vanguard Funds S&P 500 UCITS ETF
• iShares Core FTSE 100 ETF
• iShares Physical Gold ETC
• Invesco Markets Bloomberg Commodity ETF
• iShares Global Clean Energy ETF

As shown by the above list, investors have clearly been eager to gain exposure to a wide range of sectors this year. This may not be surprising given the global economy has been unpredictable in 2022, to say the least.

Let’s take a closer look at each of the ETFs listed above.

1. Vanguard Funds S&P 500 UCITS ETF 

A popular ETF to invest in during 2022 is the Vanguard S&P 500 UCITS ETF. As its name suggests, the ETF tracks the price of the S&P 500 index.

The S&P 500 consists of the biggest companies listed in the United States, and its constituents include big tech giants, Amazon, Alphabet, Meta and Microsoft to name a few. Given its extensive membership list, the S&P 500 is widely considered to give the best indicator of the performance of the US stock market as a whole.

Since its creation back in 1957, the index has delivered impressive average returns of 10.5%, through to 2021. The past few years have been a standout period for the index. In 2019, the S&P 500 delivered a return of 31.49%. In 2020 it rose 18.4% while last year, the S&P 500 finished the year 26.89% higher.

2. iShares Core FTSE 100 ETF

Another popular ETF with investors this year is the iShares Core FTSE 100 ETF, which tracks the performance of the UK’s largest share index. So far this year, the FTSE 100 has risen just over 1%.

According to Emma Wall, Hargreaves Lansdown’s head of investment analysis, investors putting their faith in the FTSE 100 gain exposure to a number of sectors, thanks to its ‘hefty weighing’ towards energy, materials and industrials.

Wall highlights that many of these sectors have performed strongly in 2022 due to “rising metals, oil and gas prices”. 

3. iShares Physical Gold ETC

The iShares Physical Gold ETC has been popular with investors this year. It’s an exchange-traded commodity and it works in much the same way as an ETF. The main difference is that it tracks the price of a single commodity: gold.

So far in 2022, the precious metal has seen its value soar by more than 10%. Last month, the gold price was even higher than it is today, though commodities, including gold, have since fallen a tad.

That said, a 10% rise is nothing to be sniffed at, and it compares very well against the major share indexes in 2022. For example, the FTSE 100 has risen a misery 1% so far this year. Traditionally, the gold price rises during times of economic uncertainty, so investors recently piling in to buy gold are perhaps anticipating further economic woes.

4. Invesco Markets Bloomberg Commodity ETF

The Invesco Markets Bloomberg Commodity ETF provides broad exposure to the Bloomberg index. This index comprises 24 commodities across energy, grains, metals, soft commodities and livestock. 

As a result, it’s fair to say the ETF gives investors exposure to a wide range of industries. According to Emma Wall, it’s “not surprising” that the Bloomberg Commodity ETF has been popular this year. That’s because the ongoing war in Ukraine has sent the price of a number of commodities soaring, including wheat, aluminium, copper, oil and gas.

5. iShares Global Clean Energy ETF

The iShares Global Clean Energy ETF has also been a favourite among investors this year. The ETF tracks the performance of the S&P Global Clean Energy Index and is a textbook example of investing in renewable energy sources.

Given the soaring cost of fossil fuels in recent weeks, it’s perhaps not surprising that investors are now looking towards investing in more ethical sectors.

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How can you invest in an ETF?

Regardless of the sector, if you want to invest in an ETF you can do so via a share dealing account. If you can, choose an account with low fees to minimise costs.

If you’re new to investing, also take a look at The Motley Fool’s investing basics guide to help you start on the right path.

The post Revealed! These are the ETFs investors have been buying in 2022 appeared first on The Motley Fool UK.

More reading

• £10,000 invested in Barclays shares just 12 months ago is now worth…
• Here’s how a £10k ISA could generate £1,845 in monthly passive income
• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?