On 5 April every year, I picture thousands of investors getting stressed over what to do. I can hear them: “I have cash to invest, but I can’t think of what shares to buy on ISA deadline day.“
I’ve been there myself. And the answer is… relax, don’t panic.
The thing is, all we have to do by the ISA deadline is get the cash transferred into our Stocks and Shares ISA accounts. If it makes it there by the end of 5 April, it counts towards the ISA allowance just ending.
I don’t use my full allowance. But for the growing number of UK ISA millionaires, getting as much stashed away as possible each year will have made a lot of difference.
Just get the cash in
I’ll repeat… as long as the cash is transferred into an ISA account by 5 April, I’m fine. I don’t actually have to rush to invest it in shares.
If I had to actually buy shares by the deadline, I would probably top up on something I already own. Lloyds Banking Group is probably top of my list, but facing economic pressures.
I think the Boohoo share price is too low now, after its spectacular crash. We could be heading for a recession, mind. And I have already topped up on that one once.
Choosing new shares
But seeing as I don’t actually have to invest my remaining cash by the ISA deadline, I don’t need to rush into choosing one of the stocks I already own.
That means I can relax and decide what to buy, from my shortlist of options. I have not done my full research yet. But Direct Line Insurance tempts me. I’ve always liked the insurance sector, and financial stocks in general. I’m not too worried about risky times, as I’m in it for the long term.
National Grid is also on my shortlist, for its reliable dividends. I know its gas distribution business could face pressure as we move past hydrocarbon energy. But the electricity network doesn’t care what the source is.
ISA deadline decisions
When I get close to the ISA deadline each year, I often think I might stick any final few hundred I have into something I wouldn’t usually buy. This year my mind is on cybersecurity specialist Darktrace. The upside? It’s a high-tech growth share that’s fallen, and might be a bargain. The downside? I have no way to work out a sensible valuation for the shares.
I suspect I’ll end up just leaving my small amount of cash there, and top it up as we get further into the new ISA year. That will give me time to do more research. And it will eliminate the temptation to buy something risky just because of the deadline.
So what will I do on ISA deadline day itself? Nothing, other than maybe check if I can scrape together a few more pounds to transfer in.