How to avoid key investment errors

Planning to take out an ISA before the looming deadline? Steering clear of these pitfalls could help your savings grow more healthily, says Rob Griffin

- Rob Griffin

ISAs offer tremendous benefits to investors – but many people end up making the same errors every year.

The rules governing ISAs are relatively straightforward and provide the ideal way for wealth to be grown free of income or capital gains tax. However, it’s important to be mindful of the common investment pitfalls that can adversely affect your chance of making decent longer-term returns. Here are seven mistakes to avoid...

MISTAKE ONE: MISSING THE DEADLINE

You have until 5 April this year to invest the £20,000 allowance. You can’t hold it over and invest more next year. If you have money to invest but haven’t used your full ISA allowance, then you’re potentially missing out on a lot of taxfree savings over the longer-term. Check with ISA providers as to how long before the deadline you need to start getting all the paperwork finalised.

MISTAKE TWO: FORGETTING YOU ALREADY HAD AN ISA

Each year you’re allowed one cash ISA and one stocks and shares ISA. If you pay into a stocks and shares ISA at the start of the tax year, you can’t take out another one with a second provider later in the tax year, unless you’ve arranged a transfer.