At the end of last year HL had over 1,300 clients with over £1mn in their Stocks and Shares ISA.
That’s an amazing amount of money. But how have they done it?
This isn’t personal advice, if you’re unsure if a course of action is right for you, ask for advice. Unlike cash, all investments and income from them can rise and fall in value, meaning you could get back less than you invest. Past performance isn’t a guide to the future.
They use their ISA allowance and early
Unsurprisingly, in order to build up your ISA to a lofty seven figures, you can’t rely on investment growth alone.
Money invested in an ISA, along with any income from the investments, is free from UK income and capital gains tax. So, when it’s in one, it works much harder for you.
The ISA allowance for the 2024/25 tax year is £20,000. To increase your chances of being the next ISA millionaire, it’s worth maxing out your ISA allowance each tax year if you can.
Before you invest, you need an emergency cash fund – this is around three to six months’ worth of essential expenses if you’re working and one to three years’ worth if you’re retired.
Also, the earlier you start investing in your ISA, the more time your investments have to grow.
By the end of last year, over two thirds of our ISA millionaires had already topped up their ISA for this tax year. And over half of them had already put in the maximum £20,000.
Remember, ISA and tax rules can change, and their benefits depend on your circumstances.
They ignore short-term noise and don’t trade a lot
When you think of stock market success you immediately think of Hollywood films with stockbroker types yelling to buy as quickly as possible. Or day trading.
Our ISA millionaires didn’t place a lot of trades. While most of them placed trades, these were relatively infrequent.
A buy and hold approach in investments you have long-term conviction in could help you on the path to investing success.
That’s because investing for longer increases the likelihood of positive returns.
Over a period of five years or more, investments usually give you a higher return compared to cash. In fact, there’s over 100 years of data showing that for 91% of 10-year periods, investments in shares have done better than holding cash.
It’s about time in the market, not timing the market. Remember though, no returns are guaranteed, there’s always a chance you could get back less than you invest.
They have diversified portfolios
Having a diversified portfolio across lots of different sectors, industries and geographies is another key ingredient to success. It means you should always have something working in your favour.
Just under half of HL’s ISA millionaires have a mixed portfolio, combining shares and funds. While just over a third have investments mainly made up of funds.
Just one in five have investments made up mainly of shares.
It goes to show, you don’t have to be an expert stock picker. You can go far by using funds to do much of the hard work for you.
A fund manager picks the investments for you, so you don’t have to worry about the day-to-day monitoring of your investments. All you have to do is check in on them occasionally to make sure you’re still happy with how much risk you’re taking.
Where did HL's ISA millionaire clients put their money in 2024?
The table below shows the most bought funds in 2024 by HL's Stocks and Shares ISA investors holding over £1mn from 1 January to 31 December 2024.
This is measured by number of trades (minus any sales) and without any investments by monthly direct debit.
Of course, this is just a snapshot in time, which doesn’t necessarily represent the holdings in HL ISA millionaires’ wider portfolios. HL ISA millionaires don’t just hold the funds below.
If you choose to invest, you should only invest if the investment’s objectives are aligned with your own and there’s a specific need for the type of investment being made.
This article has been written independently of our investment research team. None of the investments mentioned are personal recommendations on where to invest.
Most bought funds in 2024 by HL's ISA millionaires
Legal & General Global Technology Index Trust |
Legal & General US Index |
Legal & General International Index Trust |
Jupiter India |
Artemis Income |
WS Blue Whale Growth |
Rathbone Global Opportunities |
Legal & General UK 100 Index Trust |
Legal & General European Index |
Fidelity Index World |
Youngest Stocks and Shares ISA millionaire – 27
Oldest ISA millionaire – 101
Median age – 72
Want to start your journey to become an ISA millionaire?
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