ISA Millionaires

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capital0ne
capital0ne Posts: 872 Forumite
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in Savings & investments
You read about the odd few people who have £1M plus in an ISA, but how many are there? Reading this forum there seem to be fair few contributors with quite a few thousands in s stocks and shares ISA, it would be useful to share with us your approach and how you did it.
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  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    If you had been maxing out your annual allowances since the start, getting a fixed rate of return from the investments each year, the return would have needed to be about 9% to get you there by end of this tax year:

    year ; amount added at start of year; value brought forward from end of last year ; 9% growth on the b/f and added amounts; value at end of year

    1987/88 2,400 0,000 216 2,616
    1988/89 3,000 2,616 505 6,121
    1989/90 4,800 6,121 983 11,904
    1990/91 6,000 11,904 1,611 19,516
    1991/92 6,000 19,516 2,296 27,812
    1992/93 6,000 27,812 3,043 36,855
    1993/94 6,000 36,855 3,857 46,712
    1994/95 6,000 46,712 4,744 57,456
    1995/96 6,000 57,456 5,711 69,167
    1996/97 6,000 69,167 6,765 81,932
    1997/98 6,000 81,932 7,914 95,846
    1998/99 6,000 95,846 9,166 111,013
    1999/00 7,000 111,013 10,621 128,634
    2000/01 7,000 128,634 12,207 147,841
    2001/02 7,000 147,841 13,936 168,776
    2002/03 7,000 168,776 15,820 191,596
    2003/04 7,000 191,596 17,874 216,470
    2004/05 7,000 216,470 20,112 243,582
    2005/06 7,000 243,582 22,552 273,135
    2006/07 7,000 273,135 25,212 305,347
    2007/08 7,000 305,347 28,111 340,458
    2008/09 7,200 340,458 31,289 378,947
    2009/10 7,200 378,947 34,753 420,900
    2010/11 10,200 420,900 38,799 469,900
    2011/12 10,680 469,900 43,252 523,832
    2012/13 11,280 523,832 48,160 583,272
    2013/14 11,520 583,272 53,531 648,323
    2014/15 15,000 648,323 59,699 723,022
    2015/16 15,240 723,022 66,444 804,706
    2016/17 15,240 804,706 73,795 893,741
    2017/18 20,000 893,741 82,237 995,977

    n.b. the amounts pre 1999 were from investing in a general Personal Equity Plan, the predecessor to S&S ISA. I have ignored the further £3k a year that could have been put in single-company PEPs which might have produced spectacular gains for their owners (or total loss) and also ignored the amounts that could have been put in cash TESSAs which could also be rolled into ISAs following their introduction. Anyone using those other allowances and later converting to ISAs would have found it even easier to hit the million.

    An alternative way of hitting the million would have been to max out your allowances from the start of PEPs up to the 2014/15 year, investing really badly to produce a terrible return of 0% net of costs and management fees each and every year for 27 years, but leaving you with £200k accumulated; then moved £149k of it into cash ISAs and invested the other £51k in the initial public offering of Fever Tree Drinks in November 2014 because you were a real fan of their tonic water.

    The Fever Tree shares (2196p yesterday from 134p at launch) would now be worth £852k and your £149k cash ISA (plus interest thereon) would comfortably take you over the million, despite your terrible performance for the first quarter century of your investing career.

    I'll have a G&T if you're buying...
    :beer:
  • Malthusian
    Malthusian Posts: 10,941 Forumite
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    I put my ISA allowance each year in a moronic momentum strategy promoted by the Daily Telegraph, and as a result I have a £7.19 billion fortune sitting in my HL ISA, all tax free.

    There's no substitute for hard work, people.
  • talexuser
    talexuser Posts: 3,499 Forumite
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    I read in the Sunday Times quite a few years ago there were some ISA millionaires. However the Telegraph now reckon there are ISA 5 million pots (which surprised me!):
    http://www.telegraph.co.uk/investing/isas/family-could-have-built-2m-tax-free-investment-pot/
    (at end)

    and an example of retiring at 39, even though stopped putting money in since 2000:
    http://www.telegraph.co.uk/investing/isas/isa-millionaire-beat-warren-buffett-earn-six-figure-income-life/
  • Malthusian
    Malthusian Posts: 10,941 Forumite
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    talexuser wrote: »
    and an example of retiring at 39, even though stopped putting money in since 2000:
    http://www.telegraph.co.uk/investing/isas/isa-millionaire-beat-warren-buffett-earn-six-figure-income-life/

    It should be emphasised that that was the result of what most of us would consider gambling, holding 10-15 individual shares which allowed him to make a return of 28% per annum.

    This is by no means impossible. The problem is that for every Mr Bagria there are a hundred investors who pick the wrong shares, and they don't get articles in the Daily Telegraph.

    That said, he isn't a day-trader (the article says his typical holding period is 2-3 years) and there was a time when a portfolio of 10 to 15 stocks would have been considered pretty diversified (namely the century before last). It's a highly risky approach but it's paid off in his case.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    talexuser wrote: »
    I read in the Sunday Times quite a few years ago there were some ISA millionaires. However the Telegraph now reckon there are ISA 5 million pots (which surprised me!):
    http://www.telegraph.co.uk/investing/isas/family-could-have-built-2m-tax-free-investment-pot/
    (at end)

    and an example of retiring at 39, even though stopped putting money in since 2000:
    http://www.telegraph.co.uk/investing/isas/isa-millionaire-beat-warren-buffett-earn-six-figure-income-life/

    Over the last 30 years I've averaged just over 8% from a basically 60/40 passive indexing approach. For most of that time I was maxing out my tax deferred savings opportunities and also investing after tax. I'm in the US so don't have an ISA, but the maths of aggressive and constant savings and compounding return is the same.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • jimjames
    jimjames Posts: 17,619 Forumite
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    edited 13 October 2017 at 1:32PM
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    I've been doing some work on compounding and it should be easily achievable. I'm not close to £1m but equally I've not put anywhere near the maximum into ISAs. If I had I think I'd be comfortably over that so it's definitely possible.

    In terms of approach, invest regularly every month into a balanced mix of low cost index trackers and leave the money there long term to compound. Even small amounts can massively add up over the long term.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    edited 13 October 2017 at 2:10PM
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    jimjames wrote: »

    In terms of approach, invest regularly every month into a balanced mix of low cost index trackers and leave the money there long term to compound. Even small amounts can massively add up over the long term.

    Yes. The more you can invest the better and the earlier the better too. I got on the investing path early partly because my first employer encouraged it and put 17% of salary into a DC pension. The pension funds were managed by a big insurance company and 30 years later I still have that fund which has compounded at around 6% pa, it will grow by 4.3% this year. I haven't put anything into it for 26 years and 21k back in the early 1990s has grown to over 100k.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • sorcerer
    sorcerer Posts: 878 Forumite
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    Robbie Burns claims to be an ISA millionaire, his website is here http://www.nakedtrader.co.uk/
  • chockydavid1983
    chockydavid1983 Posts: 713 Forumite
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    If you invest close to the yearly allowance for a long enough period with average returns, you would reach it:
    http://www.comparefundplatforms.com/home
    Whether it's necessary to get to a million is another question. For me, somewhere between 1/4 and 1/2 would be enough. I like my job but I would probably then reduce my hours.
  • Archi_Bald
    Archi_Bald Posts: 9,681 Forumite
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    Official ISA stats: https://www.gov.uk/government/statistics/individual-savings-account-statistics

    OP, it would be good if you could post the answer to your question when you have found it - I am sure it's in there somewhere.
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