When the new tax year begins, some people rush to invest their money in a stocks and shares Isa. But with stock markets volatile, is now a bad time to invest?
The new tax year has come again and the annual £20,000 tax-free allowance for stocks and shares Isas has reset.
Here, we look at the advantages and risks of investing sooner rather than later.
Please note that this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of an investment platform before committing to any financial products.
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The sooner you invest your money in a stocks and shares Isa, the longer it will be in the market. This gives you more opportunity for your returns to compound, meaning any money you’ve made will earn returns, on top of your initial investment. Over time, this can add up to significant extra earnings.
Camilla Esmund, senior manager at Interactive Investor, explains: ‘If you are in a position to do so, the start of a new tax year can be a useful time to consider making use of your Isa allowance early. This so-called ‘early bird’ approach means starting to use your new tax-year allowance as early as possible after 6 April, when allowances reset.
‘That means money is invested earlier within the tax-efficient wrapper, giving it longer to benefit from the magic of compounding and potential growth.
‘We can see how powerful early action can be in practice. For example, 28% of Interactive Investor Isa millionaire contributions for the year were made between 6 and 30 April 2025, shortly after the new tax year began.’
This pattern extends to other platforms too, Hargreaves Lansdown data showed almost a third of their Isa millionaire topped up or opened an Isa in the first two weeks of the 25/26 tax year.
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Is now a good time to invest?
It’s not just the Isa allowance to consider, as we head into the new tax year amid ongoing conflict in the Middle East and the continuing fallout from global tariffs.
Those already invested may have seen some of the consequences – investment data provider FE fundinfo found that more than 95% of funds lost money between 28 February and 17 March. Stock markets have seen major recovery since then, and the S&P 500 (a stock market that tracks large US companies) even reached a record high at the end of April.
The Bank of England deputy governor Sarah Breeden warned of a likely fall in stock markets as she said, 'There's a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.'
She added, 'The thing that really keeps me awake at night is the likelihood of a number of risks crystallising at the same time – a major macroeconomic shock, confidence in private credit goes, AI and other risky valuations readjust – what happens in that environment and are we prepared for it?'
Some investors like to buy stocks and funds during downturns in the hope that share prices will recover, although it’s hard to know whether a drop is as low as prices will go or just the beginning of a major decline.
The longer you stay invested, the more likely it is (although not guaranteed) that you’ll be able to recover any losses sustained in difficult circumstances.
If you time your investments perfectly, you’ll walk away with the biggest returns.
But no one has a crystal ball, and it’s a lot easier said than done. Getting the timing wrong can also mean you limit your chance to grow your money.
An alternative strategy is to invest a set amount every month over a longer period.
You might not see the same highs as getting the timing exactly right, but you have a better chance of mitigating the lows of getting it wrong.
As a regular investor, the value of your existing investments may fall (at least temporarily) in times of turmoil and when share prices drop, but you’ll also get more for your money when your regular investment buys up shares or funds at a lower price.
How to save with regular investing
Some investment platforms will offer discounts on trading fees when you set up a direct debit for monthly investments.
Fund and UK share trading costs down from £5 to free
£20
Note: Fees are accurate as of 27 April 2026.
Fidelity International also has a different account fee for regular investors with less than £25,000 in their Isa. Instead of a flat £90 annual fee, you’d pay 0.35% of the value of your investments. For investors with £5,000, that would work out as an annual saving of around £72.
