The good news is that you can become an investment millionaire overnight using get-rich-quick tips from social media. The bad news is that you’d have to start with £2mn and stop when you’d lost half of it.
The real secrets of the investment millionaires aren’t being spouted by self-styled trading gurus online – they’re sitting in plain sight in the portfolios of those who’ve already built million-pound ISA portfolios.
These millionaire investors aren’t in it to ‘get rich quick’. There are some exceptions to the rule, but the vast majority of them have built a fortune through the far more reliable approach of getting rich slow. The average age of an HL ISA millionaire is 75, and the most common three ages of millionaires are 68, 74 and 79.
HL's 813 ISA millionaires in numbers
The average age of an HL ISA millionaire is 75.
The youngest ISA millionaire is 37.
The oldest is 100.
Last year, 30% used their ISA allowance within the first month of the new tax year.
54% used their allowance within the first three months.
Around two thirds didn’t trade their portfolio at all in the 2022/23 tax year to the end of March.
What’s the secret sauce?
They consistently invest as much as possible of their allowance, and in most cases they do it early in the tax year. In the most recent tax year, almost a third invested the full allowance within the first month, and more than half had done it in the first three months.
37
Of course, not everyone can lay their hands on £20,000 to invest every year, but the principle still works – investing what you can afford as soon as you can afford to.
Most importantly, they don’t take enormous risks. Instead, they’ve built diverse and balanced portfolios.
What do our ISA millionaires invest in?
More of them hold collective investments than single shares, including investment trusts, funds and exchange traded funds.
There are three funds investing mainly in the UK in the top ten fund holdings, and one with slightly over half its holdings in the UK. However, there are also four global funds and one focused on Asia. The takeaway is, these millionaires are geographically diversified, with their eggs in lots of different baskets.
There are also a few income funds – that’s because as you get older you often tend to switch to more income paying investments.
However, there’s also room in these larger portfolios for some specialist funds, and some focusing on unloved companies that the manager expects to come back into favour.
ISA millionaires have shown some enthusiasm for responsible investing too. Stewart Investors Asia Pacific Leaders Sustainability makes the top ten funds, which aims to invest in companies that benefit from and contribute to the sustainable development of the countries they operate in.
When you have a larger portfolio, you also have more scope to add specialist funds into the mix. It’s why we see special situations funds and global opportunities in the list of popular investments.
This article has been written independently of our investment research team to offer some inspiration, but isn’t personal advice or a guide on how or where to invest.
Investments and any income from them will rise and fall in value, so you could get back less than you put in. You should choose investments based on your own objectives and attitude to risk. If you’re not sure whether an investment is right for you, ask for financial advice. Tax rules can change and benefits depend on individual circumstances.
The 10 most popular funds held by ISA millionaires
Funds | KII |
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Investing in the funds listed in this piece won’t be right for everyone. Only invest in a fund if its objectives align with your own, and there’s a specific need for that type of investment within your portfolio. Investors should understand the specific risks of a fund before they invest. You can find out more about these funds, including their key investor information above.
It’s also important not to put all your eggs in one basket. Spreading your money (diversifying) gives you access to more opportunities and can reduce risk.
Stocks and Shares ISAs are easy to understand and flexible, so can be a good option to hold your investments.
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