Investing regularly with a Stocks and Shares ISA can be a lucrative journey towards wealth. The compounding returns of the stock market are well known. But with an ISA this process is accelerated even further as capital gains and dividend taxes are eliminated from the equation.
But how much money can investing actually make? The answer to this question ultimately depends on where capital is put to work.
Here in the UK, there are thousands of stocks to pick from. However, the universe of companies extends even further when venturing abroad to markets like the New York Stock Exchange or Nasdaq in the US.
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Crunching the numbers
Let’s say it’s 2014, and I’ve just invested £10,000. How much money would my ISA now be worth?
| Index | FTSE 100 | FTSE 250 | S&P 500 | Nasdaq 100 |
| Portfolio Value | £13,018 | £13,634 | £28,815 | £53,131 |
| Portfolio Value with Reinvested Dividends | £18,318 | £17,535 | £37,011 | £53,860 |
Looking at the UK-listed indexes, the total returns after dividends have been pretty lacklustre, at least when compared to their US counterparts.
With a significantly larger portion of the market concentrated on technology firms, the US stock market has been a far greater source of returns for investors over the last decade. And since the demand for technology continues to skyrocket, that’s a trend unlikely to change in the future, I feel.
So does that mean investors should forget that UK shares are focused exclusively on US stocks when building an ISA portfolio? Not necessarily.
Despite the mediocre performance of the FTSE 100 and FTSE 250, the London Stock Exchange has still had its fair share of millionaire-making returns. And as a whole, these indices have been far less volatile compared to the S&P 500 and Nasdaq 100.
In other words, while US stocks can provide a rather lovely boost to potential returns, it also comes paired with notably higher risk.
A top UK growth stock to buy?
One of the best-performing growth companies listed in London over the last decade is Games Workshop (LSE:GAW). In fact, after dividends, it’s generated a jaw-dropping return of 3,502% since October 2014!
That’s enough to transform a £10,000 initial investment to £350,164 – outperforming even the tech-heavy Nasdaq 100.
Considering this business sells plastic miniatures for hobbyists, that may come as quite a shock. There are a lot of factors behind the success of this business. But most of it can be boiled down to management cultivating an exorbitant amount of pricing power. So much so that even during the height of the cost-of-living crisis, Games Workshop continued to achieve double-digit sales and earnings growth.
Today, demand continues to remain strong. Following the announcement of the Christmas Battleforce box sets for Warhammer 40,000 and Age Of Sigmar on a live stream, the website proceeded to crash as customers rushed to get more information. And in its latest one-sentence trading update, management confirmed that “trading for the three months to 1 September 2024 has been in line with the Board’s expectations”.
Pricing power obviously has its limits. And with at-home 3D printing technology steadily becoming better and more affordable, maintaining its price hiking ability may prove challenging. Nevertheless, this company’s managed to defy expectations so far, and it’s why I feel it’s a risk worth taking for my Stocks and Shares ISA today.
