Each year sees a surge toward the end of the tax year in adverts for ISA investing and the statutory warning to use your allowance or lose it. As a result, many investors go down to the wire in subscribing to these tax-efficient accounts. So, if you can afford to, it can be potentially more productive to invest early in the tax year rather than waiting until the last minute.

The consensus is that the longer your capital is invested, the longer it is working harder for you. Investors are generally aware of the benefits of having a medium to long term investment strategy but may not be aware that it can make a significant difference to your wealth if you invest early in each tax year rather than later.

Investing into an ISA at the start of the tax year doesn't eliminate the potential issue of market timing but it does mean you are less likely to get caught up in a last-minute rush with little manoeuvre against market forces. If you invest your full allowance straight away, then you have more time potentially benefitting from being invested throughout the duration of the year. 


Pound cost averaging

Monthly contributions, however, offer the opportunity of still investing if you cannot utilise your full allowance in a single payment and can also reduce exposure to market volatility. By drip feeding your money into the market, you can benefit from pound-cost averaging. Markets can be volatile and as a result, investments can fall as well as rise. By investing regularly, you can take advantage of this due to the ability to potentially buy more units for the same investment. Even in the most volatile times, for example, since the financial crisis and including the more recent impact of the COVID 19 pandemic, the power of drip feeding and pound cost averaging can play a valuable part in many investment strategies. 


The 'early bird catches the worm'

So whether you have money to invest using your ISA allowance in full or part, there is no point in hanging around. Instead, start utilising your allowance as soon as you can and leave your investments to accumulate. Remember that time is money when it comes to investing and after all, as the saying goes ‘the early bird catches the worm’ and in this case, there is a whole year of potential returns to be had.

Please note, you should still try to avoid making any hasty decisions and remember to take your time and identify your investment objectives and overall time horizons.

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