How easy is it to become an ISA millionaire? We crunch the numbers

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Millions of Brits have taken advantage of tax-free savings since the Labour government introduced Individual Savings Accounts (ISAs) in 1999. Indeed, the most recent official figures show that, at the end of 2018/19, the market value of adult ISA holdings stood at a colossal £584 billion.

More than 11 million adult ISAs were subscribed to in 2018/19, with around £67.5 billion added to ISAs over the course of the tax year.

Given that the annual subscription limit for ISAs is now £20,000, how easy is it to become an “ISA millionaire”? Read on to find out.

How to become an ISA millionaire

When the then chancellor, Gordon Brown, introduced ISAs, savers could only invest up to £7,000 a year. Indeed, the current limit of £20,000 has only been in place since 2017.

For the first nine years of the ISA, it was only possible to contribute £7,000 – a total of £63,000 over that period – so on the face of it reaching the magic £1 million ISA investment looks like it would be a tall order.

However, This is Money report that 529 savers with broker Hargreaves Lansdown have ISAs valued at more than £1 million. According to the report, these investors had to invest the maximum in their ISA and achieve an average 14% annual return to hit the £1 million mark.

So, it is possible to grow your ISA to a seven-figure sum. And, with the subscription limit now much higher than it was in the early days, shouldn’t it be much easier?

In simple terms, the answer is “yes”. According to Morningstar, if you maximised your ISA contributions by investing £20,000 a year, you did this for 25 years, and you achieved annual growth of 5% then you’d end up becoming a millionaire. A 7% return might see you hit the magic number four years earlier.

Of course, there are two important factors here – the level of contributions and the return on your savings.

Why a Cash ISA might not be the path to becoming a millionaire

The ONS reports that, in 2020, the average UK household annual disposable income was £30,800. So, if you managed to save 10% of this, you could set aside £3,080 a year in your quest to become an ISA millionaire.

If you saved £3,080 a year into a savings account and it grew at a rate of 1% a year, after 25 years you’d have £114,421. This assumes you increase the amount saved by 2% each year (the inflation target) to reflect rising income.

This shows that investing in something like a Cash ISA, where interest rates are currently low, is unlikely to see you achieve your millionaire ambitions.

Instead, if you invested this money, and it grows by 5% a year, after 25 years you’d have £193,411. While better, it’s still not the seven figures you’re looking for (indeed, with annual growth of 5% you’d have to save for 51 years to reach millionaire status).

So, the key to becoming an ISA millionaire is to maximise your contributions. Here are some tips for doing that.

Three tips for saving more

Start early

The earlier you begin to save, the more time your money has to grow. In addition, you’ll benefit from the magic of compound returns – something Albert Einstein is reported to have called “the eighth wonder of the world”.

Morningstar provide a useful example. Say you decided to invest the £3,080 mentioned above into a Junior ISA for a new-born child. You increase this amount by 2% a year, and you achieve a 6% annual return.

When the child is 18, if they take over the ISA and continue to invest at the same rate, they will be a millionaire by the age of 46.

Maximise your contributions

In the examples above, the assumption is that you increase your savings by 2% a year. If you can put aside more than that – perhaps increase your contributions every time your salary increases, or you receive a bonus – then you’re likely to reach your target more quickly.

If you can, maximise your ISA contributions each year. As we have seen, a 5% annual return will see you reach seven figures in just a quarter of a century.

Be patient

If you’re investing towards a goal over several decades, there will be ups and downs during that period. Even in the last 20 years or so we’ve seen the dotcom bubble, the global financial crisis, and the coronavirus pandemic all result in market volatility.

There’s an old saying that it’s “time in the markets, not timing the markets” that matters. This means that being patient and staying invested is often a better strategy than trying to “buy low” and “sell high”.

The last few months is a good example. If you’d decided to cash in your investments in March 2020 when markets fell, you’d have missed out on the significant growth since – the FTSE 100 has risen by around 35% since the “bottom” in March 2020.

Get in touch

If it’s time for your financial review, or you want to explore how we can help you in this uncertain time, please get in touch. Email or contact your adviser on 020 3828 8100.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.


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