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How do you become an ISA millionaire? Investment returns could be key

Published: January 8, 2025 by Jennifer Armstrong

The number of people with at least a million pounds in their ISAs is on the rise. If you want to join their ranks, consistency and investing could be key.

An ISA is a tax-efficient way to save or invest. The interest or investment returns added to your ISA won’t be liable for Income Tax or Capital Gains Tax. As a result, they could provide a useful way to cut your tax bill.

In 2024/25, you can add up to £20,000 to ISAs during the tax year but there is no cap on how much you can save during your lifetime. The ISA allowance resets at the start of each tax year, and you cannot carry forward unused allowance.

According to a report in MoneyWeek, the number of ISA millionaires has tripled in just three years. The latest figures show that in 2022/23, there were 3,180 ISA millionaires, compared to 1,030 three years earlier, and just 570 eight years before.

There are also around 7,000 people approaching ISA millionaire status with between £750,000 and £1 million saved or invested.

So, if you want to become an ISA millionaire, what can you do?

Make regular ISA deposits part of your financial plan

As you can’t carry forward unused ISA allowance, missing an opportunity to deposit the full £20,000 allowance could set back your plans to become an ISA millionaire.

Making ISA contributions part of your wider financial plan could help you set a goal and stick to it. You might decide to deposit a lump sum at the start of the tax year when the allowance resets, or spread your deposits across the year by making regular, monthly payments into your ISA.

Remember, the ISA allowance is for each individual. So, you might want to contribute to your partner’s ISA if you’re planning together, or even deposit money into your child’s ISA to lend them a helping hand.

Investing could help you become an ISA millionaire 20 years sooner

Regularly adding money to your ISA is essential if you’re to become an ISA millionaire. But you also need to think about how hard your money is working.

If you deposited the maximum £20,000 into an ISA each tax year, it’d take your contributions 50 years to turn into £1 million. The good news is your deposits could earn money too.

When opting for a Cash ISA, your savings would earn interest. The interest rate varies between providers and the most competitive deals often mean you’ll need to make regular deposits or lock your money away for a defined period.

While the money in your Cash ISA is “safe”, interest rates are typically lower when compared to potential investment returns. So, investing could help you become an ISA millionaire sooner and it’s an option many people choose.

Indeed, according to HMRC, around 12.4 million ISAs were subscribed to in 2022/23, and more than a third were Stocks and Shares ISAs.

The MoneyAge report suggests if someone had contributed the maximum to a Cash ISA every year since they launched in 1999, they’d have around £275,000 based on an average interest rate of just 1.21%.

In contrast, the average annual return of a Stocks and Shares ISA during the same period was 9.64% before fees were applied. If those averages continue, those investing the maximum amount could become an ISA millionaire by 2043 – it’d take cash savers an extra 20 years to reach the milestone.

Keep in mind that investment returns cannot be guaranteed. Market volatility could lead to the value of your investments falling as well as rising. So, it’s important to consider your attitude to risk and circumstances when weighing up your ISA options.

Whether you choose a Cash ISA or a Stocks and Shares ISA, you can benefit from the power of compounding. By leaving the interest or investment returns in your account, they could go on to generate interest or returns of their own. As a result, the pace at which your ISA grows could increase over time.

Consider if investing is right for your goals

While investing could help you become an ISA millionaire, that doesn’t mean it’s automatically right for you.

All investments have some risk, and it’s often advisable to invest with a minimum time frame of five years. As a result, if you’re saving for a short-term goal, a Cash ISA, or another type of savings account, might be better suited to your needs.

So, before you start depositing money into a Stocks and Shares ISA, consider what your goals are and what level of risk is appropriate for you. If you have any questions about investment risk, we’re here to help.

Get in touch to talk about your ISA

If you want to talk to us about how to make the most of your ISA allowance, please get in touch. We’re also here to show you how an ISA could fit into your wider financial plan and support your goals.

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.


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