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The stocks and Shares ISA deadline is just a few days away. I think it is a great investment vehicle, especially given the attractive tax implications.
Please note that tax treatment depends on each client's individual circumstances and may be subject to change in the future. The content of this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any type of tax advice. Readers are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.
Let me discuss two common mistakes that I have learned not to make. Also, I'll be reviewing a stock I plan to buy for my ISA as soon as I can.
Get the cash!
The end of the fiscal year seems to surprise us every year. I know I feel that way.
I think a big problem is using the £20,000 allocation and depositing the money in a timely manner.
My Foolish colleague Alan Oscroft recently wrote a great article on how Hargreaves Lansdown investors rushed to fund their ISAs at the last minute, among other issues.
I admit I have done this in the past. However, what if there are banking issues, such as my online application not working on the deadline day? I could miss it.
I would make sure to deposit regularly and use my full allocation, if I have the cash to do so. Preventing instead of sorry is a life lesson that I was taught early on. I also apply this to investing in certain cases.
Deposit now, invest later
Many investors have the misconception that the deadline means the stock must also be purchased before the end of the fiscal year. This is simply not the case.
The purchase of shares can be made at any time. The deadline primarily refers to the use of your allocation for the fiscal year.
In my opinion, hasty purchasing decisions can lead to bad investments. I'm a big advocate of taking my time, doing my due diligence, and making sure I buy the best stocks to build my wealth.
A stock I'm looking at
From a profitability and growth perspective, Lloyds Banking Group (LSE: LLOY) shares look very attractive to me.
The business has come under pressure in recent times given the volatility we have seen in the market. Additionally, stocks also haven't moved much since the 2008 financial crisis, not to mention the recent turmoil.
However, the stock looks attractive with a price-to-earnings ratio of just six and also offers a dividend yield of 6.1%. Additionally, the company is looking to further reward investors with a series of share buyback plans. However, I am aware that dividends are never guaranteed.
Naturally, there are risks involved. Continued economic volatility is a cause for concern. Additionally, a recent investigation by the Financial Conduct Authority (FCA) into the mis-selling of car finance could lead to a significant fine. This could affect profitability.
I am encouraged by Lloyds' vital position in the UK banking ecosystem. Much of this is due to the company's position as the UK's largest mortgage lender. The housing imbalance in the UK could provide longer-term growth opportunities, which could boost performance and growth.
For me, the bullish aspects outweigh the bearish factors mentioned. This is why I am attracted to stocks.
