It’s a silly question really, asking who wants to be an ISA millionaire. Who doesn’t?
To quote Groucho Marx, “While money can’t buy happiness, it certainly lets you choose your own form of misery”.
Recent figures from HM Customs & Revenue show the number of people in the UK with ISA accounts worth £1m or more has shot up by more than 200% over the past three years.
Passive income stocks: our picks
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Now, according to analysis by InvestEngine, there are 3,180 people wallowing in their own form of misery with their money. That compares to just 1,030 in 2021.
More millionaires to emerge soon?
But that’s not all.
InvestEngine reckons a further 7,000 people have between £750,000 and £1m in their ISAs.
Also, some 30,000 more have between half a million and three-quarters of a million, and a whopping 213,000 have between a quarter of a million and half a million.
That’s a big pipeline of successful ISA wealth-builders. So how are they doing it?
Well, according to Andrew Prosser, head of investments at InvestEngine, just sticking the money in a Cash ISA won’t get the job done.
Prosser asserts that even someone who put the maximum in a Cash ISA every year since they started in 1999 would now have about £275,000. Not bad, but not a million.
Instead, InvestEngine’s research suggests the average annual return on Stocks and Shares ISAs has been 9.64%. So if an investor were to put £20,000 a year into an ISA and replicate that rate of annual return, it would take 19 years to get to a million, or by 2043.
My plan for a Stocks and Shares ISA
Okay, so we open a Stocks and Shares ISA, then what?
Well, here’s the plan I’ve been following:
- Find out about investment strategies.
- Come up with a plan.
- Add regular money to the Stocks and Shares ISA for investment.
- Follow the plan and buy good stocks and shares.
- Be patient and wait for progress in the underlying businesses to unfold.
What is a decent stock opportunity? For me, it’s a high-quality underlying business with a growth runway ahead and a reasonable valuation now.
For example, I like IG Group (LSE: IGG), the FTSE 250 online trading platform provider.
It ticks my boxes for quality. For example, the operating margin is running at a decent-looking 37% or so. On top of that, the business is delivering returns on equity and capital at around 16%.
Volatility in the markets tends to benefit the business — and we get plenty of that! When volatility is high, stocks and other market prices often move faster and further. Such swings can be attractive to traders and they tend to trade more.
IG has a decent record of steady progress and, with the share price near 944p, the forward-looking dividend yield is near 5.3% for the trading year to May 2026.
I’d aim to collect and reinvest that dividend income in my ISA account. But one risk facing the business is traders may scale back their activity — perhaps because they’ve lost much of their money through poor trades!
Nevertheless, in my quest for a million, my aim would be to diversify between several stocks to reduce the risk from any one investment going bad.
