It's ISA Season

Why you shouldn't wait to top up your ISA

The beginning of March is the start of what is sometimes known as 'ISA Season’. We like our clients to try and avoid this!

The favourable tax treatment around ISA’s makes them one of your first ports of call for investing (you’re allowed to invest up to £10,200 for the current tax year). 

From March onwards, just before the end of the tax year, people rush to utilise their stocks and shares ISA allowance. But, it has been argued that a surge of funds coming into the market can drive the market up. It would, of course, be foolish to suggest that this happens every year as there are many factors that influence the markets.

However, if we look at 2010 as an example, on April 15th, 10 days after the end of the tax year, the FTSE 100 hit 5825 points.

By July it was sub 5000 points. It was only on the 4th November that the FTSE 100 rose its head above these levels.

There are strategies that can be put in place that reduce the risk in these situations. Investing in a more cautious environment initially and then slowly phasing into the markets works for some people. Investing on a monthly basis reduces the risk and stops the last minute rush into the market.

Investment strategies are very personal things. Which strategy is right for you depends entirely on your individual circumstances, your financial portfolio as it stands today, your lifestyle, ambitions and attitude to risk, amongst many other things.

If you haven’t had a review of your finances recently, we recommend you speak to your financial adviser.

Regular reviews of your financial portfolio ensure its aims are kept on track and any changes in your circumstances, the political and economic environment (of which there have been many in recent months!) are all appropriately reflected in your portfolio.

Article by Max Spurgeon
Director and IFA at Legal & Medical Investments
January 2011