19 years of ISA investing in investment companies now worth £436,894
Lump sum investment versus regular saving over ISA lifetime since 1999.
It’s that time of year when the end of the tax year is in sight and the countdown is on for investors to use their ISA allowance. Research from the Association of Investment Companies (AIC) using Morningstar suggests that fully investing the maximum ISA allowance (£186,560 in total) 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.
Interestingly, 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% behind the lump sum investment total.
The research indicates that the lump sum ISA investment slightly outperformed regular ISA investment over the past 19 years. It’s interesting to see that, 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, Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) 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.”
Lump sum vs regular saving share price total return (From 1st April to 31st March per period - 1999 to 2009)
| 1999 - 2000 | 2000 - 2001 | 2001 - 2002 | 2002 - 2003 | 2003 - 2004 | 2004 - 2005 | 2005 - 2006 | 2006 - 2007 | 2007 - 2008 | 2008 - 2009 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Annual ISA Limit | £7,000 | £7,000 | £7,000 | £7,000 | £7,000 | £7,000 | £7,000 | £7,000 | £7,000 | £7,200 |
| Monthly Investment | £583 | £583 | £583 | £583 | £583 | £583 | £583 | £583 | £583 | £600 |
| Total Amount invested | £7,000 | £14,000 | £21,000 | £28,000 | £35,000 | £42,000 | £49,000 | £56,000 | £63,000 | £70,200 |
| Lump sum* | £9,428 | £14,571 | £21,127 | £18,330 | £36,767 | £52,026 | £83,935 | £98,446 | £100,079 | £72,316 |
| Regular savings* | £8,294 | £15,150 | £20,882 | £21,869 | £36,776 | £50,469 | £81,367 | £97,077 | £101,329 | £81,319 |
*Value of investment at end of period
Lump sum vs regular saving share price total return (From 1st April to 31st March per period - 2009 to 28th February 2018)
| (continued from above) | 2009 - 2010 | 2010 - 2011 | 2011 - 2012 | 2012 - 2013 | 2013 - 2014 | 2014 - 2015 | 2015 - 2016 | 2016 - 2017 | 01/04/2017 - 28/02/2018 |
|---|---|---|---|---|---|---|---|---|---|
| Annual ISA Limit | £7,200 | £10,200 | £10,680 | £11,280 | £11,520 | £15,000 | £15,240 | £15,240 | £20,000 |
| Monthly Investment | £600 | £850 | £890 | £940 | £960 | £1,250 | £1,270 | £1,270 | £1,667 |
| Total Amount invested | £77,400 | £87,600 | £98,280 | £109,560 | £121,080 | £136,080 | £151,320 | £166,560 | £186,560 |
| Lump sum* | £123,663 | £152,247 | £161,186 | £201,995 | £231,002 | £276,517 | £287,487 | £380,770 | £436,894 |
| Regular savings* | £120,564 | £150,265 | £153,854 | £196,878 | £222,586 | £267,035 | £281,986 | £370,941 | £414,941 |
*Value of investment at end of period
-Ends-
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Notes
- Performance figures based on the last official close price at the month end, on a % share price total return basis with net income reinvested. No expenses taken into account. Source: AIC using Morningstar..
- The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 347 members and the industry has total assets of approximately £174 billion.
- Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
