Net Isa sales via investment funds totalled £1.1bn for the tax year 2012-13. However, £347m was invested in the first five days of April alone and more than half of the sales were made between 1 March and 5 April.
In practice, the vast majority of investors only think about their Isa decisions in March, once they know how much money they have to play with after the expensive Christmas period and the January deadline for tax returns. There is also the 'use it or lose it' nature of the Isa allowance, which introduces an element of seasonality in buying behaviour. In this sense, we cannot really avoid the 'Isa season'.
However, the figures indicate that some investors are panic-buying Isa funds in the last few days of the tax year. This is a terrible idea and unnecessary.
Daniel Godfrey, IMA chief executive, said: "This is a common trend, but investors should be reminded that they can invest in Isas on a regular monthly basis. It not only reduces the financial burden of finding a lump sum, but also reduces risk as you buy more units if prices fall, which then achieve higher proportionate gains when prices recover."
Alternatively, the deadline can easily be avoided by holding a self-select Isa, on offer from many stockbrokers. These have a cash facility via which you can drip-feed Isa monies into funds or direct shares after you have subscribed the full amount. The downside is that you won't get a good rate on your cash while you are holding it in this facility, so the value of your funds will be eroded by inflation.
