I bet you haven’t used up your full ISA allowanced for the 2018-19 year yet.
Actually, seeing as it’s a generous £20,000 that you can invest tax-free over the year, not that many people will have enough spare income to fully exploit the potential benefits.
I certainly don’t, but we should still make as much use of it as we can.
The deadline is not until midnight on 5 April, when the tax year turns over, so there’s no rush, is there?
Last minute
Well, according to the This is Money website, possibly as much as half the amount invested in ISAs every year goes in during the final three months — so we’re already well into the last-minute rush period.
I think that’s a big mistake, on two main points. Firstly, it suggests people are spending too much over the bulk of the year and are only stashing away some money for their old age in the final quarter.
Coincidentally, that’s right after the Christmas and New Year holiday, so it sounds like New Year resolution guilt might be kicking in a bit.
It could be that folks are regularly saving throughout the year and only finalising their investment choices in the final three months, but I reckon most don’t think about it for the main part of the year.
Gather your thoughts
It’s also not leaving you a lot of time to do your research and decide where best to invest your cash. I personally maintain a shortlist of my favourite shares, and follow how the companies are doing over the year. That way, whenever I have some money to invest, the research is already done and I’m ready to buy.
Talking of the best place for your savings, I can only emphasise my thought that a cash ISA is a complete waste of time. I’ve already explained how, in these days of ISA interest rates coming in below inflation, a cash ISA would actually be losing you money in real terms.
For me, it simply has to be company shares, as investing in the world’s top stock markets has beaten cash savings hands down for more than a century.
Long term
Saying that, I do think you need a long-term horizon of at least a decade for investing in a stocks & shares ISA, as over the short term, the stock market can be volatile — as we’ve seen in recent years.
But even then, you might be surprised to learn that the FTSE 100 has grown by nearly 65% in the past 10 years, even without dividends.
And in the previous ‘lost decade’ it came out pretty much flat when dividends are included. So overall, the past 20 years have been pretty good to share investors, even though that period covered the banking crisis and the oil price slump.
Best shares?
Which shares do I think are the best for long-term investments? For me it’s got to be big-dividend FTSE 100 shares, and I think the conditions in 2019 are very favourable for long-term gains.
If you haven’t got your 2018-19 ISA plans in place yet, I say get it sorted as soon as you can.