Fully investing the maximum ISA allowance (£186,560) with a lump sum investment each year in the average investment company since ISAs were introduced in 1999 would have grown to £436,894 by the end of February 2018, research from the Association of Investment Companies has shown.
If the annual ISA allowance for each year was regularly invested in 12 equal monthly payments since the introduction of ISAs, investors would have £414,941 by the end of February 2018, only 5 per cent behind the lump sum investment total.
The research indicated that the lump sum ISA investment slightly outperformed regular ISA investment over the past 19 years. When markets were volatile in 2000/01, 2002/03, 2003/04, 2007/08 and 2008/09, regular investments outperformed the lump sum investment.
Commenting on this research, AIC communication director Annabel Brodie-Smith said: “You’d have received nearly £437,000 if you had invested the full ISA allowance each year in the average investment company over the past 19 years, more than double the amount invested. Those who chose to regularly invest their ISA allowance wouldn’t be far behind, with their pot now worth nearly £415,000.
“Lump sum investment company ISA investments tend to outperform regular monthly investing because there is more money invested and working away from day one. However, regular investment may be more suitable for investors who do not want to worry about the right time to invest. Regular investing allows investors to buy more shares when prices are low and less shares when prices are high, which helps smooth out the highs and lows of markets.”
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