Many of us dream about becoming millionaires, but plenty of us give up, thinking that it’s a goal that’s just too far out of reach. However, it’s not as unrealistic as you might think. Plenty of UK investors have filled their ISAs up with stocks, shares, investment trusts and all sorts of other assets to hit this target.
To show you how possible it is to reach millionaire status with your ISA, I’m going to reveal some investments that have helped people do just that. I’ll also explain how you can get on your way to hitting this major money milestone.
What is an ISA millionaire?
Typically, an ISA millionaire is anyone who’s reached a net worth of £1 million in an ISA account. The most common way people hit this figure is through a stocks and shares ISA, rather than, say, a Cash ISA, because the higher market returns make it easier for investment accounts to grow using compound interest over time.
The majority of ISA millionaires have reached this level of success by making the most of their ISA each year and consistently putting money to work.
There are limits as to how much you can put into your ISA, and this has changed over time. The £20,000 yearly allowance today is significantly higher than the original £7,000. However, don’t take this as a signal that the allowance is going to keep growing forever. Each tax year, there’s potential for the government to make changes.
What 10 investment trusts have made ISA millionaires?
According to Interactive Investor, if you’d put the maximum allowance into your stocks and shares ISA from 1999 to 2022 and held each of these investment trusts, here’s what your returns would have looked like:
| Investment trust | Sector | Share price return from 06/04/99 to 25/02/22 | Total ISA value at 25/02/2022 |
| Hg Capital Trust (HGT) | Private Equity | 3,450% | £2,062,931 |
| Scottish Mortgage (SMT) | Global | 1,776% | £2,046,762 |
| Allianz Technology Trust (ATT) | Technology and Media | 1,603% | £1,746,012 |
| Pacific Horizon (PHI) | Asia Pacific | 3,210% | £1,726,154 |
| Polar Capital Technology (PCT) | Technology and Media | 1,298% | £1,555,681 |
| Aberdeen Standard Asia Focus (AAS) | Asia Pacific Smaller Companies | 3,606% | £1,399,197 |
| BlackRock Throgmorton Trust (THRG) | UK Smaller Companies | 1,504% | £1,394,984 |
| Montanaro European Smaller (MTE) | European Smaller Companies | 1,109% | £1,255,549 |
| Scottish Oriental Smaller Companies (SST) | Asia Pacific Smaller Companies | 3,222% | £1,201,039 |
| TR Property (TRY) | Property & Securities | 2,015% | £1,197,023 |
Do these investment trusts teach us anything about investing?
It’s interesting to see that there’s quite a range of sectors present in this list. There’s no single area or sector that blasts everyone else away.
This suggests that there are many different routes to becoming an ISA millionaire. You don’t just have to cross your fingers and pray for luck.
Of course, keep in mind that past performance doesn’t dictate future results. So this is by no means a blueprint to follow blindly. Who knows what the next 20 years may have in store for you?
It’s also worth noting that these figures are based around investors putting all their money into a singular investment trust. Although these funds do usually invest in a range of investments, they are not completely diverse. So your portfolio may lack diversification if you just pummelled all of your savings into one of them.
Should you strive to become a millionaire?
Not necessarily! A million pounds is a lot of money, but it’s a pretty arbitrary sum. You don’t have to become a millionaire in order to be financially independent or comfortable.
Personally, my targets are much lower because I don’t live particularly lavishly and I want to try and keep things that way! You might favour simple pleasures like me, or perhaps you want a much more comfortable and expensive lifestyle, which is also fine!
But the point is, you shouldn’t just strive for a million for the sake of it. You may need less, or you may need more. So take a look at what works for you and your lifestyle. Whatever figure you land on, the undeniable fact is that a stocks and shares ISA gives you the greatest opportunity to make your financial dreams a reality.
How do you become a successful ISA investor?
If you want to start your path towards becoming a successful investor, an ISA millionaire or something in between your first step is setting up an account.
Using a platform such as the Interactive Investors Stocks and Shares ISA provides a massive range in investment choices, including the investment trusts above. If you want to compare some other platforms, check out our top-rated stocks and shares ISAs.
Once you’re set up, your next job is to work towards maximising that allowance however you can. It might take a while, but the more you’re able to put away, the faster you’ll reach your goal.
Keep in mind that all investing carries risk and there are no guarantees. So, invest carefully or you may get out less than what you put in.
Don’t leave it until the last minute: get your ISA sorted now!
If you’re looking to invest in shares, ETFs or funds, then opening a Stocks and Shares ISA could be a great choice. Shelter up to £20,000 this tax year from the Taxman, there’s no UK income tax or capital gains to pay any potential profits.
Our Motley Fool experts have reviewed and ranked some of the top Stocks and Shares ISAs available, to help you pick.
Investments involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.
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About the author
George is a freelance writer focused on educating others in personal finance, tax, and investing. He’s a qualified Financial Adviser and previously worked within property and insurance in a number of different countries…. Read More<!—->
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