Our calculations show that had you invested your full ISA allowance at the start of the tax year every year, you would be more than £20,000 better off a decade later than someone who had rushed to invest right at the very end of every tax year.
And that isn’t something any investor should turn their nose up at.
Our calculations1 show that if you invested your full ISA allowance into the FTSE All Share on 6 April each year and had done so every year over the past ten years, your original investment of £136,360 would have grown to £199,832. Please remember past performance is not a reliable indicator of future returns.
If, though, you had waited until the very last day of each tax year on 5 April to invest your full ISA allowance into the FTSE All Share every year, that £136,360 you had invested would be worth just £179,611 after 10 years - that’s £20,221 less.
Admittedly, we don’t all have the full £20,000 to invest in one lump sum. But don’t think that puts you on the back foot. It doesn’t. In fact, drip-feeding your money into your ISA with a regular saving every month would have got you much better returns than investing it all at the last minute.
By splitting your annual ISA allowance into 12 monthly investments your investment of £136,360 would have grown very nicely to £192,500. Some £12,889 more than if you had waited until the last minute to invest the full sum.
Unveiling the investment ‘magic’
It’s all down to the power of compounding. Being invested and staying invested makes the magic happen. This magic of compounding is so powerful that a very small sum, given many years to grow, will do so, so much more than a much larger sum of money invested years later. So the sooner you get that money working for you, the better.
The critical component here is time. It is the key factor of compounding and the reason why you should start to save as soon as you can. By investing regularly and reinvesting income over the long term, our figures show that this approach can help you super-charge your returns.
The message is simple, being invested is better than not being invested at all.
And if all the Brexit uncertainty has left you unsure about where to invest we have a solution. Fidelity Investment Director, Tom Stevenson, has selected four funds he thinks will be winners in 2019.
They are all from the Select 50 range of our preferred funds, which boils down the thousands of choices on offer across the funds universe to the top 50 that our experts believe have what it takes to make your money grow best.
And if you still can’t choose from Tom’s Picks or the wider Select 50, then you can opt for a selection of them all in the Select 50 Balanced Fund.
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Brexit has now been delayed, yet again. Uncertainty is so often cast as the nemesis of the investor, but it should be seen as more of an opportunity.
Don’t hold off from investing while you wait to see what happens next on the Brexit front. As we’ve seen that’s a very slow burner and not one that should stop you in your tracks. Now, at the start of the new tax year, it’s time to make that new (tax) year resolution to invest.
Test the water and see how your investments grow. Then when you’ve caught the investment bug you can explore the full range of funds and individual company shares that we offer.
In this era of low interest rates, making your hard-earned money work harder for you doesn’t need real magic, even without an end to the Brexit debacle, opportunity is there for the taking. In reality the magic is already in your hands. Get started and you’ll soon see how.
1Fidelity International, April 2019. Based on a total investment of £136,360 (the full ISA allowance each year since the 2009/10 tax year) invested in the FTSE All Share Index each tax year at different times.
Five year performance
As at 31 March
|FTSE All Share||6.7||-5.3||21.9||1.4||8.8|
Past performance is not a reliable indicator of future returns
Source: Refinitiv, as at 31.3.19, in local currency terms with income reinvested
The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.