As a new tax year begins, there are several advantages to investing sooner rather than later. Recent research shows many women investors, especially older and more experienced ones, are keen to make the most of new tax allowances right away. Here are some key reasons why getting an early start makes sense:
- Tax Advantages
By investing within an ISA or pension from April 6th, you immediately shield that money from tax for the entirety of the new tax year. This is particularly valuable with reduced dividend and capital gains allowances taking effect. - Make the Most of “Lumpy” Money
Many women come into lump sums from divorce settlements, inheritances, etc. Investing this windfall early maximizes the time it can compound tax-free within an ISA or pension. - Reduce Market Timing Risk
Rather than trying to lump sum invest at an optimal time, regular monthly investing allows you to pound cost average into the market. This removes the stress of trying to time volatile market movements. - More Time to Compound
The earlier investments are made, the more time they have to potentially compound and grow over decades until retirement. Starting that process promptly is hugely beneficial.
While investing a lump sum has merits, there are distinct advantages to putting at least some of your annual ISA or pension allowance to work right when the new tax year starts. This allows investors, especially women with “lumpy” income sources, to maximize long-term tax-free compounding from the very beginning.