‘Early bird’ Isa investors may end up thousands of pounds better off – analysis

“Early bird” investors who max out their Isa allowance at the start of the financial year rather than at the end could potentially end up around £83,000 better off, analysis suggests.

InvestEngine calculated that an investor who had put maximum annual amounts in their stocks and shares Isa at the start of each financial year since 1999 and invested in funds tracking global equities could have a pot value of around £1,277,963.

Someone who invested at the end of every year could have £1,195,127 – a difference of £82,836 or 6.93% – according to InvestEngine’s modelling.

Investment returns vary and the actual amount an investor could end up with would depend on factors such as individual circumstances, funds invested in and market conditions.

The value of investments can go down as well as up.

Some investors may consider taking financial advice when weighing up suitable options for their circumstances.

Annual Isa allowances have changed over the years, and the current level is £20,000.

InvestEngine said that by investing at the start of the tax year, investors can make the most of their tax-free allowance early on and their money has more time in the market to potentially grow and compound.

For investors who are unable to save big sums of money in one go, there can still be advantages to investing early in the tax year.

InvestEngine’s modelling indicated that those who invested £1,000 at the start of every tax year since 1999 could potentially have £129,135 in their pot, compared with £122,536 who invested at the end of tax year – a difference of £6,599.

Andrew Prosser, head of investments at InvestEngine, which is offering bonuses for Isa and sipp (self-invested personal pension) transfers subject to terms and conditions, said: “In both the short and long-term, investing early in the tax year can make a significant difference to a savers’ investments.”

He added: “Our own data from the end of the tax year shows 10% of customers waited until the last week to invest a combined £33 million.

“But the first day of the new tax year (April 6) has already seen customers invest £9 million at a higher average amount than last year – and on a bank holiday – showing resilience in the face of volatility and ensuring their investments have as much time to grow.”