With the end of the tax year falling on 5 April, the deadline for investors to use their £15,000 individual savings account (Isa) allowance is almost upon us. This year the deadline is effectively earlier as Thursday 2 April 2015 is the last working day of the tax year.
It can be difficult to choose from the thousands of funds and direct shares on offer and make sense of the information overload as the Isa deadline approaches. But as Isas are a 'use it or lose it' tax allowance, it's important to make the most you can of them before midnight on 5 April.
Here are our top tips:
1. Use Cash Parks if up against the clock
If you're undecided about your Isa investment and the deadline is looming, you may want to make use of a 'cash park' which is designed to hold your cash temporarily while you make up your mind. You can make your maximum investment into a stock-and-shares Isa and opt for cash (Isa Cash Park), giving you more time to make a decision. Money held temporarily in an Isa cash park will earn minimal interest, so is not a good long-term solution. However, it will buy you a bit of extra time.
2. Ready-made fund portfolios are a solution to Isa overload
If you've left it to the last minute to make use of your Isa allowance, you may not have the time to sift through the thousands of funds available. If you don't want to select funds individually, you can opt for a ready-made 'fund of funds' portfolio. These are promoted on DIY fund platforms such as Hargreaves Lansdown, Bestinvest and Charles Stanley Direct and are available to suit a range of investment styles and risk levels.
3. Keep an eye on all old Isas and ideally transfer into one pot
It can be easy to forget about checking your previous year's investments in Isas. Research by Nutmeg has shown that 22 per cent of Isa holders are completely in the dark about how their previous Isas are performing. And 40 per cent of Isa holders admitted they do not review their Isa performance because it takes up too much time. One way to ensure you're always on top of your money is to transfer all old Isas into one place.
4. Start thinking about next year
Investing a lump sum means you run the risk of mis-timing the market and buying at the top. Ideally you would spread your investments over several months to ensure you mitigate against this risk. This will make sure that you're not in the position of making a last minute Isa investment for 2016.
5. For those with higher risk appetites - consider momentum investing
George Soros is the most famous exponent of momentum investing. But what does it involve? Simply put you buy the fund which was the top performer over the last six months, taking into account all sectors. Six months later, you repeat the process by selling the fund you hold, and buying the top performing fund of the most recent six months. A recent paper by a trio of academics at London Business School concluded: "There is extensive evidence, across time and markets, that momentum profits have been large and pervasive."
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For more Isa inspiration, read our 50 ideas for your Isa special feature.
