Do markets rise at the start of the new financial year as people invest more money?

funguy

Just a question as a conversation starter?

Do markets rise at the start of the new financial year as people invest in their new ISAs etc? 

This time of year must see more money flowing into S&S ISAs etc - does this increase the value of them for those already invested?

eskbanker

According to https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/894771/ISA_Statistics_Release_June_2020.pdf there's typically about £20-30bn subscribed to S&S ISAs throughout each tax year, which is practically rounding error territory in global markets....

Billy_B_North

No.

No simple pattern like this is sustainable, as everyone would know that the price was going up, and buy ahead of time, which would make the market rise to the price that everyone predicted for after the retail money came in.

underground99

funguy said:

Just a question as a conversation starter?

Do markets rise at the start of the new financial year as people invest in their new ISAs etc? 

This time of year must see more money flowing into S&S ISAs etc - does this increase the value of them for those already invested?

Some will be investing at the back end of a tax year instead of in the new tax year, to use up the rest of their year's ISA or pension allowance once they know how much spare money they have. Others are investing at the start of the next one instead.  Some will be selling towards the end of a tax year to cash in their gains and use up their CGT exemption. Or at the start of a new one once they get some more exemption. Some will be selling in Feb-March to draw down money from their pension at the end of the tax year to avoid paying more tax on it the next year. Others will be waiting for that next year to start before they can take any more money out of the pension and do it in April-May instead. o, you might think there will be some extra activity in March and April, but it won't be the same dates or the same direction. 

Maybe you think there would be less activity in the summer when people are going on holidays, or less in December to make sure they can afford Christmas. Or less in January as people have had an expensive Christmas, But maybe they have a year-end bonus to invest in January instead, or a new year resolution to get on top of their savings or investments. The reality is that there are all sorts of spikes up and down in activity levels for different reasons when looking at a big crowd of retail investors, but most people are investing month after month through their workplace pensions or direct debits etc.

Importantly, markets are global and most countries in the world don't have a new tax year start in early April so have no quirky motivations to buy and sell.  So you might as well ignore the noise and all the inevitable threads about whether it would be better to invest before or after the tax year end or a bit of both.

Thrugelmir

Cash deposited into S&S ISA's doesn't have to be invested immediately. 

sevenhills

According to Google, the best day of the week to buy shares is Monday and the best month to buy stocks is April.

https://www.liberatedstocktrader.com/which-month-is-the-best-to-buy-stocks/

jimjames

funguy said:

Just a question as a conversation starter?

Do markets rise at the start of the new financial year as people invest in their new ISAs etc? 

This time of year must see more money flowing into S&S ISAs etc - does this increase the value of them for those already invested?

You're assuming the UK tax year has a relevance worldwide. You're also assuming that the level of money added at the start of a tax year is above rounding errors in global markets.
I don't believe either of those are true.

HAYDAN2002

Sadly it makes no difference.

maxsteam

It's easy to test the hypothesis that shares go up in April. There is plenty of historical data. A popular phrase used to be "sell in May and go away". I think that it was a popular phrase just because of the rhyme.

coastline

Data suggests April is one of the best months. It wouldn't be a surprise to see a pause for breath shortly after such a massive rally. Fits in well with the summer lull and a pick up in the autumn.
Markets are priced for recovery and so far they've been correct.
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Doshwaster

I suspect that this year there will be more money that usual being put into S&S ISAs given the negligible rates available in Cash ISAs and a lot of people having spare cash from not commuting and being unable to go on holiday. Of course the danger is that some people are going to be putting their money into investments that they don't understand and aren't going to be happy if they don't get the returns they expect and will want someone to blame.