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Jun 2017

How to become an ISA millionaire

How to become an ISA millionaire

ISAs and the Personal Equity Plans that came before them have been around since 1987, offering UK residents the chance to save and invest tax-free. Over the years, a number of ISA investors have built up ISA funds worth in excess of £1million, making them into so-called “ISA millionaires”.

To become an ISA millionaire takes steady investment over a number of years, with Nutmeg currently estimating that it could take around 22 to 28 years for a savvy investor to make a million from their ISAs. However, what this means is that if you are willing to take the right steps, you can build up a very significant nest egg over the course of your working life.

We look at the key steps you need to take to become an ISA millionaire.

Invest in stocks and shares

You can simply use your ISA as a savings account, earning interest on the money you deposit. However, to build a million pound pot, you really need to be using your ISA allowance in a way that offers bigger returns.

Putting your ISA allowance towards stocks and shares gives you a much better chance of earning higher returns, although it does usually mean putting your capital at risk. It therefore depends whether you are willing to risk your investment in order to become an ISA millionaire.

Always invest as much as you can afford

For the 2018/19 tax year, the ISA allowance is £20,000 and historically the ISA allowance has increased over time, although there is no guarantee of this. To build the largest ISA pot possible, you should always aim to invest the maximum amount allowed in any given tax year.

Never withdraw money from your ISAs if at all possible

Some ISAs allow you to add and withdraw funds whether you like, other will charge you a penalty fee for taking money out before the ISA expires and some do not allow withdrawals at all.

Whatever the case, it is rarely a good idea to take money out of your ISAs if you can possibly avoid it. It is almost always going to be better for you financially to use any other savings or funds you have first, rather than taking money out of your ISA and sacrificing the tax-free interest or dividends.

Go for slow, long term growth

If you aim to become an ISA millionaire, it is advisable to go for slow, steady growth using reliable investments, rather than high risk/high return investing.

Many ISA investors put their money into large, established companies with growing earnings which are family-owned or where the directors own stock personally in the business. These businesses are generally seen as more likely to be risk-averse, suggesting they will continue to offer steady, if moderate returns over the long time period needed to build up a million pound ISA portfolio.

Find investment ISAs to help you become an ISA millionaire

Looking for ISA investments to help you build a tax-free nest egg? Take a look at the range of investment ISAs on our website to see some of the most attractive options currently available.

Selected ISAs

Stocks & Shares ISA

from Nutmeg

ISA Option
Allows ISA Transfers
  • Protection Scheme: FSCS
  • Fund Choice: Nutmeg offer 4 diversified portfolios with exchange traded funds (ETFs), using technology to keep charges low and clearly show where you’re invested.
  • Invest From: Min. £500 single

Why we like it: Get an intelligent stocks & shares ISA portfolio - Choose from one of 4 portfolio options. No tie-ins, no set-up fees, no exit charges. Easy, online set up in minutes. Start with as little as £500. Portfolio management fees of 0.45%-0.75% up to £100k. 0.25%-0.35% beyond £100k. There are also underlying investment charges, see Nutmeg's fee page. Plus, live chat, amazing customer support and brilliant investor tools and guides. Authorised and regulated by the FCA. Capital at risk. ISA rules apply.

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

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Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

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