If you're like many people you may have previously left it late in the financial
calendar to put money in your ISA. Investing at the last minute (literally in some
cases - our last ISA deal on 5th April was processed at 23:54) means you would miss
out on a year's worth of tax breaks. It also means you have a bigger decision
on your hands about where to invest since you had an entire year's worth of
ISA allowance to consider.
This year, why not be the early bird who gets the worm? You could invest into an
ISA for 08/09 with a lump sum or set up a monthly investment using a direct debit.
The latter is particularly attractive for a number of reasons. Indeed, the Government
has recognised the attractiveness of regular savings plans by increasing the ISA
allowance to £7,200 so that this divides cleanly by 12 months - £600 per month.
So, what's all the fuss about?
- You can invest any amount from £50+ per fund. If you want, you can make lump-sum
top-ups at any time and put these into the same fund(s) or try out a new fund instead.
- Regular savings schemes can be stopped or started at any time, or you can simply
vary the amount into each fund if needed.
- The fund choice is not set in stone. At any time you can switch fund holdings that
have built up and/or redirect future contributions into a new fund.
- Many people have good intentions about utilising their ISA allowance but then leave
it too late in the year, by which point it becomes too hard to muster the amount
they hoped to invest. A monthly savings plan divides the contribution into bite
size amounts that are easier on your cashflow.
- A regular investment plan stimulates good investor discipline by getting you into
the habit of saving for the future.
- You needn't worry about the timing of your investment as the direct debit does this
for you. Predicting the top and the bottom of markets is notoriously difficult and
represents the Holy Grail of the investment industry. If you accept that markets
go up and down it means that in some months you will buy when the market is up.
True, this means that you get fewer units, but if the market goes down the following
month the tables turn and you get more units per pound invested. This trick is known
by several names: market smoothing, pound cost averaging etc. Whatever you like
to call it, this method brings comfort to anyone worried about the timing of investments
and it works particularly well during times of increased volatility. For more information
on the merits of Pound Cost Averaging click here for an article by Steve Marriott,
Senior Research Analyst at Bestinvest.
- You can see your investment build over the months by logging into Bestinvest's Client
Centre.
Sound good?
If so, to set up a monthly contribution you'll need to complete an application form.
Unfortunately, you can't apply online as you'll need to sign the direct debit instruction,
but you can download the Cofunds ISA Application Form by clicking here. As always,
please make sure you read the Key Features document before applying. Feel free to
call one of our advisers on 0800 970 9143 who will guide you through the form.
Which funds to buy?
If you need some pointers on which funds to opt for then have a look at our 5 easy
ways to choose your funds. If you are investing a lump sum then you can continue
from this page to buy your ISA in just a few clicks, but if you like the idea of
monthly savings you’ll need to complete the form once you have made your choice.