ISA millionaires set to more than treble – How to join the club

A striking piece of analysis has put the power of patient ISA investing firmly in the spotlight.

A Freedom of Information request has shown that the number of people holding ISA portfolios worth more than £1 million is set to increase dramatically.

With there being triple the number of ISA millionaires now than three years ago, now is the time to understand what makes ISAs so effective and how to get the most out of your own savings.

Why is the number of ISA millionaires growing?

The increase in the number of ISA millionaires speaks to a growing financial literacy among those who seek to maximise their wealth.

The tax-efficient nature of ISAs has made it an attractive source of growth. Additionally, ISAs can continue to generate wealth even if an investor stops engaging with them.

It is believed that even when savers stop contributing to their ISAs, something as reasonable as an 8% annual return could still make many savers millionaires.

The 8% return is observed to have the power to lift the number of ISA millionaires from 5,070 in 2023 to around 7,100 by April 2024, nearly 9,510 by April 2025 and almost 13,100 by April 2026.

Even if the annual return was closer to 5%, the number of ISA millionaires would still rise to around 12,300 by April 2026, up from the same 5,070.

The secrets of the ISA millionaire

What separates ISA millionaires from those with more modest portfolios is not necessarily access to exotic investment strategies. The key habits are straightforward:

Start early and invest consistently – The average age of an ISA millionaire is around 73, reflecting decades of disciplined saving.

Use the full annual allowance – The current allowance of £20,000 per person per year is the foundation. Many ISA millionaires contribute as early in the tax year as possible to maximise the time their money is working for them.

Invest rather than save – Cash ISAs simply cannot replicate the long-term growth of a well-managed stocks and shares ISA. Over the past decade, stocks and shares ISAs have delivered average annual returns of around 9.64 %, compared with around 1.21 % for cash ISAs.

Don’t interrupt compounding – Withdrawing funds in response to short-term market movements can significantly erode the long-run compounding effect.

Reinvest income – ISA millionaires typically reinvest dividends and income rather than drawing them down, allowing the compounding process to accelerate.

ISA changes on the horizon

The rules around ISAs are changing soon for under-65s, so seeking professional guidance is advisable.

Planning your ISA contributions alongside your wider wealth strategy, including pensions, investments and estate planning, remains as important as ever.

How can we help

At LFWM, we help clients build and manage tax-efficient investment strategies that make full use of ISA allowances.

Whether you are just starting to invest or looking to optimise an existing portfolio, we can help you structure your savings to maximise long-term growth while aligning with your wider financial goals. If you would like to have a confidential conversation, please get in touch with our experts on the right.

The information included in this article may be subject to changes in taxation following its publication. This article is intended for informational purposes only and does not constitute advice.

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