Half of savers wait until the last minute to make investments and rush them through in the final week of the tax year, new data reveals.
Yet this bad habit could cost more than £15,500 over 30 years and is a poor strategy for investing.
If you invest sporadically or in a big lump sum, you miss out on compound growth and are more exposed to fluctuations in the stock market.
According to wealth manager True Potential, 52 per cent of all money invested via its smartphone app is transferred in the last eight working days of the financial year, between March 27 and April 5.
Tax-free allowances on the sum you can put into Isas reset each year. Those who miss the deadline lose out on tax-free profits, which is why so many rush to meet the date. But flooding your money into an Isa just before the cut-off opens you up to unnecessarily high levels of risk, True Potential says.
Bad habit: If you invest sporadically or in a big lump sum, you miss out on compound growth and are more exposed to fluctuations in the stock market
Its director Daniel Harrison says you should think of investing in the same way as with direct debits, so you invest at the start of the month when you get paid or pay other bills. Investing consistently allows your investments to snowball and benefit from compound growth.
The average investor who drip-feeds their savings every month would be £15,548 better off over 30 years, True Potential finds.
For example if you invest £6,828 (the average sum paid into a True Potential Isa last year) into a stocks and shares Isa at the end of each tax year, then after 30 years you could expect to have £556,021, given a 6 per cent annual return.
If you invested the same amount of money monthly, equivalent to £569, then the return on your investment would rise to £571,569 – a £15,548 difference.
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