Reaching a million pounds in a Stocks and Shares ISA isn’t as far-fetched as it sounds. According to the latest data available, there were nearly 5,000 ISA millionaires in the UK!
However, those figures were from over 18 months ago. Here’s what the stock market has done since then:
These returns don’t even include dividends. Therefore, I assume there’ll be well over 5,000 investors with a seven-figure portfolio right now. We’ll know for sure when the next set of figures is released.
Here, I’ll outline how I aim to one day join this growing ISA millionaire club by investing quite modest sums.
Active investing
My first goal is to try and max out the annual ISA allowance, which currently stands at £20,000. This works out at approximately £1,666 a month or £384 a week.
Next, I aim to beat the market by picking individual stocks (active investing). My portfolio is globally diversified, including many UK and US shares, so I think the FTSE All-World Index is a good benchmark.
It’s comprised of about 3,645 large and mid-sized company stocks in developed and emerging markets.
The average annual return of this index is around 10.3%. I’m targeting a return slightly above this over time (roughly 12%).
A potential hidden gem
One under-the-radar stock I’ve been considering for my portfolio is Novocure (NASDAQ: NVCR). This is a global oncology company that has pioneered Tumour Treating Fields (TTFields) therapy.
This involves the use of electric fields to disrupt cancer cell division, while sparing healthy cells. Its flagship product is Optune, a scalp-worn, portable device approved for an aggressive form of brain cancer.
In Q3, the firm’s revenue grew 22% year on year to $155m. However, its net loss was $30.6m, due to $51.9m in research, development, and clinical studies expenses.
Though I expect the firm to reach profitability, these losses add risk, despite it also having $960m in cash.
On 2 December, the firm announced that its TTFields therapy extended the lives of patients with a form of advanced pancreatic cancer when combined with chemotherapy.
This was Novocure’s third positive Phase 3 clinical trial in the last two years. And upon this news, the stock exploded nearly 50% higher. However, it still remains 87% below its mid-2021 record.
Novocure will probably file for regulatory approval of this new cancer product in 2025, with its Chinese partner, Zai Lab, doing likewise in China.
From today’s modest $2.9bn market cap, I think the stock could outperform long term. I’m seriously considering it.
Getting to £1m
So, I have my amount (£1,666 a month) and the average return target (12%). Now I can calculate how long it should take my ISA to reach seven figures.
Note that I haven’t included platform fees, and the figures assume I reinvest dividends to really fuel compound returns. Naturally, it’s possible I might underperform, and individual dividends aren’t guaranteed.
| Year | Accrued interest | Balance |
|---|---|---|
| 1 | £1,099 | £21,091 |
| 5 | £34,031 | £133,991 |
| 10 | £170,210 | £370,130 |
| 15 | £486,407 | £786,287 |
| 17 | £691,168 | £1,031,032 |
In the above scenario, it’ll take me just under 17 years to reach £1m. Due to the power of compounding though, it’d only take another six years of regular investing to get to £2m!
Food for thought…
