Martin Lewis advises using a staggered deposit plan into a stocks and shares ISA to smooth volatility and reminds savers about upcoming ISA allowance changes
The current uncertainty sparked by the conflict involving Iran has pushed oil prices higher and raised worries about longer-term effects on food production and global economic growth. In that context, consumer expert Martin Lewis addressed a common question: is now a sensible moment to open or add to a stocks and shares ISA? His answer combines two clear themes: invest with a long-term horizon and use practical steps to reduce the risk from short-term swings.
Lewis emphasises that for money you do not need for at least five years, a diversified approach is sensible — for example using a global tracker fund or an S&P tracker or FTSE tracker. He warns that perfect timing is unknowable, so the priority should be a robust plan rather than attempting to guess market highs and lows.
Alongside that advice he recommended a concrete operational tactic that can help nervous savers keep exposure gradual and controlled.
Why timing the market rarely works
Attempting to pick the best day to invest is risky because short-term market moves are inherently unpredictable.
Martin Lewis argues that over a long period, and with a broad spread of holdings, the balance of probabilities favours investing rather than sitting in cash. The central notion is to focus on long-term returns and avoid letting short-term volatility derail your plan. In practice, this means choosing a sensible asset mix and sticking to it through market ups and downs, instead of waiting for an ideal entry point that may never arrive.
A practical way to add money to an ISA
One technique Lewis described is often called pound-cost averaging. This is not a guarantee against losses, but it spreads the timing risk by adding funds gradually. By splitting a larger lump sum into smaller regular purchases, you buy more units when prices are lower and fewer when prices are higher, which can reduce the average purchase price over time. The approach can be especially helpful when markets are jittery due to geopolitical shocks or commodity-driven price moves.
How pound-cost averaging works
At its core, pound-cost averaging is an investment process: instead of committing a full amount immediately, you arrange to invest smaller chunks at fixed intervals. Lewis suggests you can leave funds in the cash portion of a stocks and shares ISA and instruct the provider to buy a chosen fund each month. This keeps your money within tax-advantaged shelter while easing the psychological and financial impact of volatile days, because your entries into the market are staggered rather than concentrated.
Concrete example: £10,000 into a stocks and shares ISA
To illustrate, imagine you have £10,000 to add. Rather than buying the whole fund position immediately, you could ask your ISA provider to hold the amount in cash and to purchase £1,000 of your selected tracker every month for ten months. That specific example smooths timing risk and is a direct application of pound-cost averaging. The trade-off is that if markets rise steadily, the delayed purchases may underperform an immediate lump-sum, but the technique reduces the chance of a large single loss if prices fall further.
What to know about ISA allowances and tax status
Separately, savers should keep the coming changes to ISA rules in mind. Currently the annual allowance is £20,000, which can be split freely between cash ISAs and stocks and shares ISAs. From April 2027, that flexibility will change: up to £12,000 can be allocated as you choose, while the remaining £8,000 will be restricted to investment-based accounts. People aged 65 and over are exempt from this reform and will retain the full £20,000 allowance. Remember that ISAs remain tax-free, so interest and gains within these accounts are not subject to HMRC taxation.
In short, Lewis recommends focusing on long-term goals, choosing diversified tracker funds if appropriate, and considering a staggered deposit plan if market volatility worries you. Keeping funds inside a stocks and shares ISA while you stage purchases preserves tax benefits and gives you time to implement a measured approach. As always, consider your personal circumstances and, when in doubt, seek independent financial advice.
