Don't leave your ISA allowance behind

The Individual Savings Account (ISA) provides a tax-efficient way to invest. Any investment growth, dividends paid, or capital gains are tax-free on assets held within one of these wrappers.

When you invest outside of an ISA, you may have to pay capital gains tax (CGT) on any profits you make over and above the prescribed annual allowance, or dividend tax on income received. Yet every year, a staggering amount of this use-it-or-lose-it allowance is left on the table. As we approach the April 5th deadline, investors should consider locking in their allowance or risk losing it at the beginning of the new tax year.

By missing even a single year’s ISA allowance, you aren't just losing the ability to shield £20,000 from the taxman today; you are losing the potential growth on that capital over time.

Greater growth

Over the long run, stocks and shares have historically offered greater growth potential than cash.

The CT Savings Plan allows for an initial investment of £2,000 into an adult ISA, which can then be supplemented by regular direct debits from as little as £25 a month.

This "drip-feeding" approach, called pound-cost averaging, can also help smooth out the bumps of market entry, meaning you may buy more shares when prices are lower and fewer when they are higher.

If you are between 18 and 39 you can also invest up to £4,000 of your allowance in a Lifetime ISA (LISA), and the government will give you a 25% bonus up to £1,000. Separately, you can also invest up to £9,000 in your child’s Junior ISA (JISA), from an initial investment of £1,000. This allows people of all ages to start investing for the future.

Moreover, while many platforms can take a larger "slice" of your pie as your wealth grows, a CT Savings Plan offers an annual flat fee regardless of the amount invested. You cannot control the Federal Reserve or the direction of the FTSE 100, but you can control what you pay to hold your assets. Many investors are blissfully unaware of how a seemingly small percentage fee, say 0.5% or 1%, can compound into a significant sum over twenty or thirty years.

By contrast, a flat-fee structure can mean that if your investment grows, a smaller and smaller proportion of your total returns is diverted away from your pocket. This transparency is essential for reaching long-term financial goals; which can help more of your capital remain invested and compounding.

Diversify horizons

Columbia Threadneedle’s range of seven investment trusts provides a one-stop shop for this necessary diversification. Whether you are looking for the storied history of the F&C Investment Trust, accessing some of the world’s exciting smaller businesses through The Global Smaller Companies Trust, or the broad exposure of the CT Global Managed Portfolio Trust, the ability to pivot between global reach and local expertise is vital. Investors seeking a UK-focus can pick from the CT High Income Trust and CT UK Capital and Income Investment Trust.

Furthermore, trusts such as TR Property Trust or the CT Private Equity Trust offer exposure to sectors that can enhance portfolio diversification and open avenues for growth, which are usually underappreciated by investors.

This breadth of choice means that whether you are interested in UK smaller and mid-sized companies or global diversified portfolios, there is a vehicle to suit your specific risk appetite. The trusts are managed by expert fund managers, supported by experienced research teams, who conduct rigorous analysis. This professional oversight aims to balance return potential with risk management, which can help support informed investment decisions.

The CT Savings Plan is designed to be straightforward. By visiting ctinvest.co.uk, you can register, select your preferred investment trust, and set up your contributions in a matter of minutes.

You can even manage your portfolio securely via a dedicated mobile app, allowing you to monitor your investments at your convenience.

Investment Risks: The value of investments and any income from them can go down as well as up, and you may not get back the original amount invested. There are no guarantees dividends will continue to increase. Tax allowances and the benefits of tax-efficient accounts are subject to change, and tax treatment depends upon your individual circumstances. Each trust has different risk factors; please see the Key Information Documents (KIDs) for further details on the risks for each trust.

© Columbia Threadneedle Management Limited. No. 517895, Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.