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ISA millionaire – 'You've certainly got to be prepared to take the downs as well as the ups'

One of our clients, Mr B from London, shares how he built his ISA to over £1 million.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

One of our clients, Mr B from London, shares how he built his ISA to over £1 million.

How times have changed.

When PEPs (the forerunners to ISAs) were first introduced in 1987, you could only contribute a maximum of £2,400 each tax year. Many thought it was barely worth considering.

But while other tax breaks have been cut by various governments, the valuable gift of the ISA allowance has continued to grow. And today, investors can shelter up to £20,000 every year from the taxman in ISAs, meaning a couple could protect £40,000 in this tax year alone.

No doubt, this has played a major part in the rising numbers of ISA investors building significant tax-free portfolios.

In fact, we have nearly 200 clients who have consistently contributed and built ISAs worth over £1 million by investing in a Stocks and Shares ISA.

We spoke to one client, Mr B from London, who has done just that.

He shares his top ISA tips as well as explaining how he prepares for both good and bad times when saving for the future.

Investments will fall as well as rise in value so you could get back less than you invest. Remember tax rules can change, and the benefits will depend on individual circumstances.

This article isn’t personal advice – it’s written to get you thinking about how to make the right decisions for you. It’s important to base those decisions on your personal circumstances, and if you’re not sure what’s right for you, we can put you in touch with one of our advisers.

Mr B from London

When did you start using ISAs?

I got started pretty early on. I was fortunate that my father was an existing Personal Equity Plan (PEP) investor and in the early days, he helped me get going. This family encouragement played a big part in my initial interest in ISAs and whetted my appetite for investing. I’ve continued putting in the maximum to my ISA since then.

Why do you invest in ISAs?

The tax advantages are obviously the main reason. But also something that’s not really talked about is the reduction in hassle. I hold investments outside ISAs and the tax calculations can be horrendous. If you want to buy and sell investments, you’ve always got that nagging doubt of tax implications in the back of your mind. And tax can be such a minefield to navigate.

With the ISA, you don’t have as much of the tax bureaucracy to deal with. It’s much cleaner and if I just want to buy and sell an investment, I can just get on with it and don’t have to worry about the tax mess it might or might not leave behind.

Where did you first learn about investing?

I suppose it was through my father’s interests. He was an investor for a long time and by putting some money aside for me to invest, this incentivised me to take an active interest. Today, I keep up-to-date with the markets by reading the Financial Times and I pick up ideas for investment opportunities from there.

Do you invest in funds or shares?

I used to have most of my investments in individual shares rather than funds and I got some good successes out of that. This was mainly companies, such as ARM Holdings, that I knew very well. I backed ARM when they were 30p per share and I sold them at £12 per share. But I wouldn’t claim that all my investments were that successful!

Over time, I realised that I was neglecting quite a few of my investments. I just didn’t have the time and wasn’t close enough to the companies I was investing in. That’s when I started to switch into funds and leave it to a professional manager to look after.

What's your investment strategy?

I try to have a mixture invested in different geographies and sectors. I don’t want to hold too many funds because I don’t have the time to track a huge number of underlying investments in these funds.

I also tend to drip-feed money into new investments. I start small and then scale up. For example, I’ll make an initial investment into something and then over time when more funds are available, I’ll invest another £5,000 or £10,000. This might not be the best strategy but it works well for me.

What are the keys to successful investing in your opinion?

You’ve certainly got to be prepared to take the downs as well as the ups. Sometimes I’ll take a look at the market and my portfolio on a bad day and feel like going back to bed! But I wouldn’t recommend taking action on a day by day basis.

"It might seem obvious but it’s also important not to have all your eggs in one basket and hold a number of different investments"

Getting yourself in a pattern where you monitor your investments regularly is also good. For a long time, I wasn’t in a regular pattern of monitoring my portfolio. I then set myself an objective of checking at least once a month, then it became once a week and now I look at my portfolio every day. If you’re just checking your portfolio sporadically, it’s hard to get an idea of what’s working well and not too well so you can take the appropriate action.

What do you enjoy about investing?

It keeps me knowledgeable about things that are going on in the market and economy. I often see things happening in the news and it’s interesting how this affects your investments. Of course, I could pay an adviser to manage all my investments for me but that wouldn’t feel the same. I really like the connection to my investments and the intellectual challenge of trying to grow my money.

Learn more

There’s no secret code to becoming an ISA millionaire, but we think building and maintaining a well-diversified portfolio is your best bet for the long-term growth and maximising your wealth.

Learn what we think you need to know about investing, how to craft your own diversified portfolio and our latest investment ideas. It should give you the confidence to turn your financial goals into a plan.

Learn how to build a diversified portfolio

But building and maintaining a diversified portfolio can be very time consuming and a tricky art to master. So if you don’t have the time, our experienced team of financial advisers can do the leg work for you.

They can assess how to potentially improve your returns and help put your portfolio in a better position to meet your goals and to make the most of your money. Although the value of investments can rise and fall, so you could get back less than you invest. Tax rules can change and benefits depend on individual circumstances.

Don’t leave it until tomorrow – qualify for our offer today

We are currently offering a £100 discount on initial advice received from HL.

You’ll need to book your call back by 30 June 2020. Our advisory helpdesk will call you at a time that suits you. They don’t provide the advice but can explain more about our service and charges. If you do decide to take advice, you will need to agree to the advice charges by 30 September 2020 to qualify – see full terms in the link below.

See offer terms

Book your call back today

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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