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It pays to invest early...

Susan

Two investors...

Jane

Both invest their full ISA allowance over 10 years...


Year Annual ISA allowance
2007 £7,000 £7,000
2008 £7,000 £7,000
2009 £7,200 £7,200
2010 £10,200 £10,200
2011 £10,680 £10,680
2012 £11,280 £11,280
2013 £11,520 £11,520
2014 £15,000* £15,000*
2015 £15,240 £15,240
2016 £15,240 £15,240

Total

£110,360

£110,360

Both portfolios grow 5% each year...


* We are aware that the ISA allowance for 2014/15 changed mid-way through the tax year. For simplication purposes we have used an allowance of £15,000 for both Susan and Jane.


Each year, Susan uses her ISA allowance on the first day of the tax year


Jane has money available, but doesn't get around to using her full ISA allowance until the last day of the tax year


Each year Susan gets a years growth that Jane misses out on



Over 10 years this has a compounding effect accelerating Susan's portfolio value


Capital invested over 10 years

£110,360

Growth over 10 years

£29,771

Total

£140,131

£110,360

£23,099

£133,459

At the end of ten years, Susan and Jane have invested the same amount of capital, however Susans's portfolio has grown more by £6,672...

Demonstrating that in this example it pays to invest early



This example is for illustration purposes only. Please remember the value of investments and the income derived from them can fall as well as rise and you may not get back all the money you invested.