How and where do HL’s ISA millionaires invest?

Having a million pounds in your ISA might sound like a pipe dream, but it’s more common than you might think.

At the time of writing there were 1,208 investors with a million pounds or more in their HL Stocks and Shares ISA.

So, what do these investors have in common, and what can you do to increase your chances of becoming an ISA millionaire?

This article has been written independently of our investment research team and isn’t personal advice. None of the investments mentioned are personal recommendations on where to invest.

Unlike the security offered by cash, investments and any income from them can fall and rise in value. It’s possible to get back less than you invest. If you’re not sure what’s best for you, ask for financial advice.

Remember, ISA and tax rules can change and benefits will depend on your personal circumstances.

Where do HL’s ISA millionaires invest?

Firstly, let’s look at what they’ve been buying recently.

Legal & General Global Technology Index was the most bought fund by ISA millionaires between April and June this year. The second most bought fund with ISA millionaires was Legal & General US Index.

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 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.

How do our ISA millionaires spread their investments?

HL’s ISA millionaires have most of their money invested in shares, but they’re well diversified across the world.

They also tend to have a higher proportion invested in the UK stock market than non-millionaires – while non-millionaires seem to prefer global shares.

How you choose your own mix of investments will depend on your own personal needs and the risk you’re willing to take.

But investing, isn’t just about where you invest, it’s about how you do it and the habits you form over time.

ISA millionaire habits

ISA millionaires share some common traits, which can set them apart from non-millionaires when it comes to growing their investments.

Here are five.

Sadly, there’s no quick fix to becoming an ISA millionaire. Starting early, putting money into your ISA each tax year, and leaving it there are still the best ways to see that money grow over time.

You could also give your children or grandchildren the best chances of growing their investments over their lifetime through a Junior ISA (JISA) for them.

They have their own allowance of £9,000 per tax year and last year, we removed our JISA account charges for them. Depending on the investments you pick, other charges could still apply.

HL’s ISA millionaires tend to use their allowances as much as possible. So, getting to that lofty £1mn figure will mean you’ll likely need to make the most of your ISA allowance.

Money invested in an ISA, along with any income from the investments, is free from UK income and capital gains tax.

With the ISA allowance for the 2024/25 tax year being £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.

Also, the earlier you start investing in your ISA, the more time your investments have to grow.

If you don’t have £20,000 to invest or it feels daunting, you could consider investing monthly via direct debit. This lets you gradually build up the amount of money invested. You can invest by direct debit from £25 a month.

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 savings. 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.

But it also shows there’s always a chance you could get back less than you invest. With investing, nothing is guaranteed.

You should make sure you have an emergency cash fund before investing, and when you do invest, it should be with the long term in mind (that’s at least five years).

Whether you’re choosing or holding investments, it can be tempting to be swept up in the news cycle or to follow the crowd.

Perhaps you’re trying to anticipate which way prices will move in the short term. Or maybe you suffer from FOMO, ‘fear of missing out’, when there’s hype about a particular stock. Investing with this mindset is risky.

ISA millionaires are likely to have tied their money up in businesses for some time. What the price is tomorrow won’t matter to them, as they don’t expect to pull their money out in the short term.

Over the long run, the volatility of market ups and downs can be smoothed out.

Remember, it’s about time in the market, not timing the market.

Blocking out the hype certainly doesn’t mean ignoring your investments however.

Once you’ve built your portfolio, it’s important to check in on your investments from time-to-time. There’s no hard-and-fast rule on how often you need to review your portfolio, but we think twice a year is sensible – once a year at the very least.

You should also check in when your circumstances or investment objectives change, or if there have been some big changes in the markets that could have long-term impacts.

Reviewing your account once or twice a year should strike the right balance between taking control of your finances and it not becoming a burden or getting in the way of life. Making too many changes to your investments and the possible costs of trading can eat into your returns over the long run.