ISA’s -Use it or Lose it!

You only receive one ISA allowance every tax year. Since you cannot carry your allowance over to next year, if you do not use it, come the end of the tax year, you will lose it. The allowance for the 2008/09 tax year is £7,200 and this is available to be used any time up until 5 April 2009. However, you don’t have to wait. You can invest any time from now and, particularly with cash ISAs, you could benefit more by doing so. The earlier you get your money into a deposit account, the more interest you will earn. For stocks and shares ISAs, there are those who try to ‘time’ their investment – that is, to buy in when stock prices appear cheaper (so they can benefit more as they recover). However, even experts seldom time the market successfully on a consistent basis so individuals could find this extremely difficult to do effectively. If you are concerned about market volatility, a better idea might be to drip feed your money in on a monthly basis – in other words,invest smaller, regular amounts – to smooth out the risk of a price fall after you have invested by buying in at a range of different levels. This system is called ‘pound cost averaging’ and can offer benefits, particularly for nervous, first-time investors. Regardless of how you invest your money, remember you only receive one allowance a year. It is therefore best to start your research early, alternativley you could speak to Mark or Clare at GMP Independent Financial Advisers LLP about all the options. This will help ensure you make the right decision.