The £19,343 ISA earlybird bonus
- The ISA season rush shows we’re all guilty of leaving it late to make the most of our annual £20,000 ISA allowance
- Better late than never but you could be leaving returns on the table simply because of when you invest
- Make your ISA investing schedule work for you. If you’re leaving it late just because you haven’t got round to it, these numbers might be the driver you need to change tack
The value of your investments and the income you receive from them can go up and down, and you may get back less than you invest. Any examples are for illustration purposes only. ISA eligibility and tax rules apply.
My first job in the investment world involved donning an ill-fitting headset and answering customer calls. By far the busiest period was the week leading up to the end of the tax year. Investors desperately trying to use their ISA allowance at the last minute meant regularly processing £20,000 contributions seconds before midnight on 5 April.
Seeing the stocks & shares ISA ads splashed across buses, taxis and train stations this past tax season gave me an inkling that we’re still leaving it late to make the most of our ISA allowance.
Does it really matter though?
Yes, deciding to invest the full £20,000 at the last second naturally induces panic in call centre staff trying to help you beat the ISA deadline. But what does leaving it late ultimately mean for our long-term investment returns?
Does when you invest affect your ISA returns?
Let’s find out with help from three imaginary investors: the ISA earlybird, the steady saver and the last-minute lump sum fan.
Each is fortunate enough to make the most of their £20,000 ISA contributions every tax year, experiencing 7% average annual returns, in line with the historical performance of the S&P 500 (although that’s no guide to future performance). They invest for 10 years and end up with a range of final values. With the contributions all the same, the difference comes down to when they invest their ISA allowance throughout the tax year.
Read more
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Stop believing these five ISA myths
The £2,220 ISA mistake: are you making it?
Could your ISA buy you 10 years of freedom?
In our hypothetical world, our ISA earlybird invests their full allowance on 6 April each year and ends up with £295,672 after 10 years, having invested a total of £200,000. Our monthly investor, who waits for payday and then puts their £1,666.67 into the market at 12 regular intervals each year, ends up with £288,475 over the decade. Our final investor waits until the last second each tax year and invests just before the 5 April ISA deadline. They finish with £276,329 after 10 years.
Does the ISA earlybird catch the returns?
£200,000 invested annually for 10 years in a hypothetical portfolio achieving 7% average annual returns. Examples are for illustrative purposes only. Dividends and interest are assumed to have been reinvested and the examples do not reflect the effects of fees. Past performance is not a reliable guide to future results.
Early > regular > last minute
There are some pretty important takeaways from our little thought experiment. We’ll get into them but first, we’re not calling anyone lazy here. There are a lot of reasons why people invest with the regularity that they do; irregular pay, March bonuses and bed & ISA strategies are a few common explanations for investing in fits and starts during the tax year, or at the very end of it. There’s also the most obvious reason that there aren’t a lot of people out there with £20,000 to lump into the market on the very first day of the new tax year.
What the illustrations show us, though, is that giving your money more time in the market trumps pretty much everything else. Sure, we could try and jump in at the lowest points possible but get that even slightly wrong and the end results can suffer big time.
Read more: Lump sum vs regular investing
The magic of compounding (aka the snowball effect of growing interest on interest) has made the difference in our example and means our ISA earlybird ends up £19,343 better off than our latecomer. That’s just shy of a full year’s ISA allowance, with no fancy strategies or secret ingredients - just time. And while the natural volatility of the stock market means we aren’t likely to see returns this smooth or predictable, for me the message here isn’t in the detail, it’s in the headline: whatever your ability to invest, let your money benefit from maybe the most powerful input in all investing - time.
Discrete calendar year performance
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 | |
| S&P 500 | 20.4% | -3.0% | 26.0% | 6.6% | 14.6% |
As at 2 April 2026. Source: FE Fundinfo. In GBP. Past performance is not a reliable guide to future results.
Important information
When investing, your capital is at risk. The value of your investments, and the income you receive from them, can go down as well as up and you may get back less than you invest. Forecasts aren’t a reliable guide to future results or returns.
Make sure to do your own research on what investments are right for you before investing or consider seeking expert financial advice. Please note that this article is meant for information and does not constitute any financial advice. This is not an offer, recommendation, inducement or invitation to buy, sell, or hold any securities, or to engage in any investment activity or strategy.
Robinhood doesn’t provide tax advice. You should seek advice if you have any questions regarding the impact your investments will have on your income tax and tax filing requirements.
