Laura Suter, head of personal finance at AJ Bell, comments on new ISA millionaire data:
“Getting to ISA millionaire status is no mean feat, so the fact that 2,000 investors have managed to achieve this accolade is very impressive. The investors in this sought-after club will have had a combination of maxing out their ISA allowance each year but also some very generous investment returns.
“Someone who put the full allowance in their ISA each year since their launch in 1999 and who earnt a steady 5% return a year would have built up a pot of just over £441,000 – not even close to being an ISA millionaire. Even if we include someone who had started saving in ISA’s forerunner – PEPs – and had saved the full limit each year since PEPs launched in 1987, getting that same 5% return a year, they would only have built up almost £708,000 in their pot.
“Everyone would like to go back in time and invest in the kind of things that the top 60 club of ISA investors who have £6.2m on average in their pots put their money into. If we assume they started when ISAs launched and put the full allowance in, they’d have to have earnt 25% returns a year on average every year since then. Even if we include PEPs they’d still have to have achieved returns of 15.5% every year to get to a pot of £6.2m today. In reality these investors probably made a few very savvy bets that rose dramatically in value and a few more stable returners.
“While it’s definitely easier to become an ISA millionaire today, with a generous £20,000 a year allowance for savers (assuming you have the money spare) the limit when ISAs launched in 1999 was just £7,000 – so past investors would have to have generated larger returns than today’s investors to make it into the elite ISA millionaire club.”
