Who wants to be an ISA millionaire?

Shaun Port


2 min read

Ever wondered what could happen if you managed to save your maximum ISA allowance every year? Well, here at Nutmeg, we’ve done the maths and found that you could become an ISA millionaire in just 22 years.

Yacht moored off coast

According to our calculations, if you save your maximum ISA allowance every year, you could accumulate a nest egg of over £250,000 in 8 years, half a million in 14 years and a cool million in 22 years.

Invest in stocks and shares

Millionaire status could be achieved by investing your full ISA allowance in a stocks and shares ISA every year, including the current tax year ending on 5th April. We’ve assumed that the government’s annual ISA allowance will grow by around 2% per year, and that your investment will make an annualised average return of 5% after fees. Although, of course, this is not guaranteed as stock markets can go down as well as up.

The increase to a £20,000 annual allowance for the 2017/18 tax year means that you could now be an ISA millionaire three years sooner than was previously possible.

Don’t forget market performance

Of course, if investments do particularly well, you could become an ISA millionaire sooner. For example, if net returns are 6.1%, the million-pound mark could be reached in 20 years.

Conversely, if markets fail to perform, you would need to save for longer to become a millionaire. We think it would take 28 years to reach the six figures based on net returns of 3%. Making a quarter of a million pounds in 9 years, and half a million in 16 years.

It’s got to be right for you

However, with investing it’s important to remember that there are several variables. Whatever the motivation is to save, having an objective is crucial. Whether it’s a figure you want to reach or a goal you have in mind it helps guide the investment journey and enables you to be realistic when defining a time-frame and risk level. These factors will change from person to person, and ultimately, they’ve got to be right for you.

Try out our ISA calculator

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Risk warning

As with all investing, your capital is at risk. A stocks and shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek independent financial advice. Past performance is not a reliable indicator of future performance.

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Shaun Port

Shaun is the chief investment officer at Nutmeg. He has over 25 years’ experience developing and implementing investment strategies for clients ranging from central banks to pension schemes to charities and private individuals. Shaun holds a degree in Mathematical Economics from the University of Birmingham and is a Chartered Alternative Investment Analyst. He can be found tweeting @ShaunPort.


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