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ISA millionaires – how did they do it and what can we learn?

With more HL ISA millionaires than last year, we take a closer look at how they did it and what we can learn.

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.

The number of ISA millionaires with HL is over two thirds higher than last year.

A Stocks and Shares ISA worth over £1 million sounds attractive. Once your money is in an ISA, there’s no UK tax on income or capital gains.

So how did they do it?

The markets have risen over the last year, but that plus this year’s ISA allowance of £20,000 is only part of the story.

This article isn’t personal advice. ISA and tax rules can change, and any benefits depend on your circumstances. All investments can go up and down in value, you could get back less than you put in. If you’re not sure what’s right for you, ask for financial advice.

They use their allowance early

Unsurprisingly lots of our ISA millionaires were quick to use the full value of their ISA allowance this tax year.

Almost half had used the full £20,000 ISA allowance within the first three months of the 2021/22 tax year. And one third had used it in the first month. 

The median age of these clients is 72 and most have been investing every year for decades.

But it’s not all down to using the full ISA allowance. They haven’t just added £1 million over the time. How your investments do is a big part of the picture.

The longer your money’s invested, the longer you’ve got to grow it.

They think – don’t take unnecessary risks

The majority of our ISA millionaires use funds or investment trusts.

This means they’re taking advantage of collective investments. Collective investments are a great way to diversify a portfolio.

By diversifying, you spread your money between different types of investments to reduce the overall impact of risk when investing.

Whether it’s types of companies, types of investments – like shares, bonds, funds and property – different parts of the world, or investment styles, there are lots of ways to do it.

It means if one part of your portfolio does badly, another part of your portfolio might be doing well. And in different times, the types of investments that were doing badly before might do better.

HOW TO BUILD A PORTFOLIO

They buy and hold

Our ISA millionaires also buy and hold for the long term. The majority of fund holders don’t trade very frequently. It’s about time in the market rather than trying to time the market.

Overtrading – buying and selling investments too often – can be costly. It can be tempting to bank profits or to try to take advantage of short-term dips. But in reality, being able to time the market is near impossible. Overtrading and trying to predict daily ups and downs can leave you vulnerable to missing out on some of the best days in the market.

IS TRADING TOO OFTEN A COSTLY MISTAKE

Could you be an ISA millionaire?

If you’re disciplined and regularly top up your account, there’s no telling what you could achieve, especially if you’re looking to invest for the next few decades.

It’s not impossible.

Though it’s worth remembering that past performance is no guarantee of future returns.

Even if you don’t think you could be a millionaire, the lessons these investors can teach us are valuable.

We’ve got more investing secrets from three people who’ve achieved a £1 million ISA.

LEARN FROM OUR ISA MILLIONAIRES

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    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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