Why it pays to invest early with a stocks and shares ISA

Why it pays to invest early with a stocks and shares ISA
Image source: Getty Images.


Paying into a stocks and shares ISA is a great habit to get into. But did you know that you can really benefit from investing the full amount as early as you can?

Let’s take a look at just how much money you might be able to make by being an early investor and using this type of account to its full potential.

Compare stocks and shares ISAs

If you’re planning to open a stocks and shares ISA, choosing the right platform is important. To help you narrow down the choices, we’ve created a list of some of the top stocks and shares ISAs.

When is the best time to invest in my stocks and shares ISA?

No one likes arriving at a party exactly on time. But holding off on your investments could seriously postpone your financial celebrations.

When it comes to your investing strategy, it appears that it’s not a good idea to be fashionably late.

Research from St. James’s Place Wealth Management shows that investing your full allowance can really impact your returns.

What does the research say about when to invest?

If you had invested your full stocks and shares ISA allowance every year since 1987, it could have had a big impact on your potential returns.

Assuming you’d put the money into the FTSE All-Share Index (a global equity fund), your returns could now look like this:

  • £1,100,932 – If you’d invested your allowance at the beginning of each tax year
  • £1,025,023 – If you’d waited until the end of the tax year to invest

An extra uplift of around 7% is no joke. That’s a difference of £75,909!

Are you making these 3 common investing mistakes?

These all-too-common investing errors could lead to missing out on the long-term wealth-building power that shares can hold….

To help you better understand these pitfalls, how you could avoid them and move forward on a path to wealth-building, we’ve created a free report, “The 3 Worst Mistakes New Investors Make”.

Just enter your best email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Should I invest early in a stocks and shares ISA?

Using up your full ISA allowance can be an excellent way to build long-term wealth.

Tony Clark, senior propositions manager at St. James’s Place Wealth Management, explains: “Some people have a habit of waiting until towards the end of the tax year to use up as much of their ISA allowance as they can.

“However, by paying in as much as you are able to early in the tax year, you give your money a far better chance of working as hard as possible for you. 
 
“Not only does this shield your investments from tax for a longer period of time it also gives your money extra time to benefit from ‘compounding’. That’s when the money your ISA makes through growth and investment income is reinvested – and so that, too, has the chance to earn even more for you.”

How can I invest in a stocks and shares ISA?

It’s easy to get set up with one of these accounts. We’ve put together some of the best options available and you can compare stocks and shares ISAs here.

Remember that all investing carries risk and you may get less out than you put in. It’s also worthwhile doing lots of research on investments to make sure you’re giving yourself the best chance of success.

Setting yourself up with a tax-efficient account like this and using it to its full potential can be a solid way to create wealth if you have a long-term investing outlook.

Please note that tax treatment depends on the specific circumstances of the individual and may be subject to change in the future.

Reviewed and rated 4 stars out of 5 by MyWalletHero

Need investment advice? Get a free initial review lasting up to 1 hour, plus £50 off any follow-up advice.

MyWalletHero has sourced you a £50 discount off the cost of advice when you find an independent or whole-of-market financial adviser through Unbiased.co.uk*. All advisers are FCA-regulated, qualified and give fully unbiased advice. To find yourself an adviser fast and for free – use the Unbiased matching tool.

*This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here.

Was this article helpful?
YesNo

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.