On April 6th, the 2021/22 ISA clock started ticking, and with it, your chance to make the most of another years ISA investment started to slip away.
At Continuum, we are looking at why, if you want to make the most from your ISA this year, now is the time to invest.
Your ISA allowance is limited
The tax-free status of ISAs makes them the foundation of most people’s investment plans.
Any cash you put inside an ISA can potentially grow faster than it would outside, because the taxman will not be taking a share of the profits it generates. Even more exciting, when the time comes to cash in your ISA, you can do so free of all income tax and capital gains tax liabilities, under current legislation.
It is hardly surprising that anyone who pays tax should consider an ISA – or that the government puts limits on what you can invest each year.
Savers and investors can put up to £20,000 in their ISAs in 2021/2022. You can invest the whole amount in one ISA or split it across different funds.
Why your ISA allowance needs to be used now
The ISA allowance lasts for the entire tax year, so you could make your investment on April 5th next year.
But there are two very good reasons not to wait and make that investment as soon as you can.
By investing now you enjoy nearly an extra year of potential growth: The longer your money is invested, the greater its potential for growth. Investing at the beginning of the tax year rather than the end ensures more time for your proceeds to have the opportunity to earn returns.
By investing now you can take advantage of the recovery: 2021 could be a year of economic growth as the world starts to recover from Covid. An investment in a suitable Stocks and Shares ISA may help you share in that recovery.
You may not be in the fortunate position of having £20,000 to invest in an ISA, especially after the disruptions of Covid. Fortunately, many ISA providers accept monthly investments, making becoming an ISA investor as easy as paying into a savings account. Drip feeding your investments may help smooth out the bumps in the market.
Your ISA allowance deserves expert support
It makes sense to get expert support without delay. At Continuum we can help you find the ISAs with the investment approach that best matches your own and help you through the maze of performance comparisons and costs.
We know the ISA market and the funds in it and we can help you find the provider that is right for you – whenever you are ready to start investing.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate taxation advice.
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