There are just eight days left until the end of this tax year but it is estimated that 15 per cent of Isa investments and savings will be made last minute.
The trouble is that doing things in a rush can result in mistakes and, if an error is made, it could mean you lose this year’s Isa allowance for good.
Whether you invest by post, by phone or online, there are a number of common mistakes made each year that leave investors disappointed. The good news is that all are avoidable.
Don’t forget to sign
The most common mistake people make when investing by post is that they forget to sign their application form or cheque and therefore miss the deadline.
Get the name right
Perhaps the second most common mistake is people making their cheque out to the wrong company. Make sure you read the instructions carefully: it is likely to be the Isa provider or platform, rather than your intermediary, that should be the payee.
Get your address right
If you have moved since you last put money in a Isa, make sure you have informed your bank, intermediary and Isa provider. If you have a different address with your bank and your Isa provider, your investment may get stopped.
And finally, if you are investing by post, don’t take the chance on first or second class mail. If you want to guarantee you use your allowance, it’s best to send application forms and cheques via guaranteed delivery. It may cost more, but at least you know they will arrive on time. So make sure you double check everything before heading off to the post office.
Mistakes aren’t just made with written applications, however. If you have left things until the very last minute, investing online or by phone can be troublesome too.
Don’t rely on your bank
Can you guarantee your bank won’t have any glitches and your debit card will work at 11pm on 5 April? It can be a good idea to let your bank know if you want to transfer a large sum of money, so they don’t need to talk to you first to let the payment go through.
Don’t rely on technology
It’s all very well having 24/7 access to the internet, but what if your broadband is down or your computer freezes? There is nothing more frustrating than watching your computer “load” as the clock ticks on.
If the reason you are procrastinating over your Isa is that you don’t know where to invest this year, your hesitation is understandable. On this side of the Atlantic, there’s Brexit, the sterling slide and the future of the Eurozone to consider. On the other, Trump is busy tearing up trade deals, while in the middle, China’s growth continues to slow.
While you do need to put the money into your Isa right now to make sure you get your tax break, you don’t necessarily have to decide where to invest.
For example, Isas are fully flexible now and you can transfer from cash to stocks and shares and back again as much as you like. So you could invest in a cash Isa for now and switch it into a fund at a later date.
Most stocks and shares Isas come with a “cash park” too, so you can literally park your money to shelter it from tax and invest it when you have made up your mind.
Don’t leave it there too long, though. Unless you need your money soon, neither cash Isas nor cash parks are paying much interest at the moment, and with inflation at 2.3 per cent the real value of your savings is being eroded. A full Isa allowance of £15,240 could lose around £300 in value over just 12 months, assuming inflation stays at 2.3 per cent and you receive 0.3 per cent on your cash savings.
Another alternative is to invest in a fund you already know and like, and switch it when you have had time to think more carefully about your investment. Some Isa providers do not charge you for switching between funds, but in other cases there may be a charge, especially if you invest directly into shares.
Data from 1 January to 28 February 2017, Chelsea Financial Services