Why investing early could make you £3,000 richer


There’s nothing like a deadline to spur us into action. That’s why so many investors find themselves opening ISAs in the final few days of each tax year, just before the final buzzer sounds on 5 April. But there are also investors who do things a bit differently, opening their ISAs in the first few days of each tax year – on 6 April or just after.

These early birds are not as big a flock as last-minute ISA investors. But their strategy has proved to be a winning one over the long term. We ran some numbers based on investing £1,000 in a typical global fund every year since ISAs began in 1999. If you had diligently invested on the first day of each tax year, you would now have £3,050 more than someone who had invested on the last day of every tax year. That’s despite putting in exactly the same amount: £23,000. Last-minute ISA investors would have turned that £23,000 into £62,240, while early birds would now be sitting on £65,290.

The reason for this loftier return? The money of early birds is invested for that bit longer. While markets of course go up and down, they generally rise more than they fall. Since 1999, the global stock market has risen in 15 out of 23 tax years. So around two-thirds of the time you would have bought in at a lower price by investing at the start of the tax year, rather than waiting until the end. And that translates into better returns for your ISA.

More about our Stocks and shares ISA

There’s a third way to invest in your ISA, also quite popular: doing it monthly. If you had invested £1,000 into your ISA every year since 1999 – but split into monthly instalments – you would have turned your £23,000 overall investment into £64,100 today. That’s a bit less than an early bird but £1,860 ahead of a last-minute ISA investor.

Again, the same principle is at play. Drip-feeding your money means it’s in the market longer than if you wait to invest all of it on 5 April – giving it longer to grow. And there’s another advantage to investing regularly. Because your money is transferred from your bank account automatically each month, it’s hassle-free and takes the emotion out of investing. So it can be a simple and smart way to invest.

Of course, whether you’re a regular saver, an early bird or a last-minute ISA investor, you’re still streets ahead of someone who isn’t contributing to an ISA at all. But if you want to make your money go even further, history shows us that more often than not, it’s the early bird that catches the juiciest worm.

£1,000 invested in an ISA each year since 1999

Type of ISA investor Amount saved Current value
Early bird £23,000 £65,290
Last minute £23,000 £62,240
Regular saver £23,000 £64,100

Sources: AJ Bell, FE, Morningstar, total return of IA Global Sector Average in GBP to 16th March 2022

Methodology: current value of a £1,000 annual ISA contribution made since 1999 on the first day of each tax year (early birds), on the last day (last-minute ISA investors), or spread across 12 regular monthly payments of £83.33 each year (regular savers).

Remember that the value of investments can change, and you could lose money as well as make it. How you're taxed will depend on your circumstances, and tax rules can change. ISA and tax rules apply. Past performance is not a guide to future performance.

These articles are for information purposes only and are not a personal recommendation or advice.

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Written by:
Laith Khalaf

Laith Khalaf is a Financial Analyst at AJ Bell. He began his financial services career in 2001 at Hargreaves Lansdown, where he worked a variety of roles across pensions and investments, covering both DIY and advised business. Laith began to focus on research and investments in 2007, becoming a leading industry commentator. He’s provided daily business bulletins on LBC, is a regular contributor to the financial pages of the national press, and a frequent guest on TV and radio. He has a degree in Philosophy from Cambridge University.

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