Investment platform AJ Bell today lifts the lid on the ISA ‘Super Investors’ that have built up the biggest stocks and shares ISA portfolios worth £1 million or more.
With an average age of 72 many ISA Super Investors with AJ Bell will have built their portfolio over decades and may have originally held investments in PEPs (Personal Equity Plan) before the introduction of ISAs nearly 25 years ago. Nonetheless, the youngest ISA millionaire on the platform is just 36 years old.
The Super Investors tend to be much more likely to hold shares than the typical investor. Among the ISA millionaires on AJ Bell’s platform, the average account holds 75% in shares (including investment trusts), with most of the rest in funds. By comparison, other ISA investors on the platform typically hold closer to 40% in funds and 60% in shares.
Shell is the single most popular stock among ISA investors with a million or more.
Importantly, this doesn’t mean shares are the best way to invest or the only way to achieve sizeable returns. Investing in individual shares carries more risk since an investor’s portfolio is likely to be more concentrated on a smaller number of companies than in a fund investment, which offers instant diversification.
ISA Super Investors hold on average 28 different positions within their portfolios, although this differs dramatically from one investor to the next. Some hold over a hundred different investments, while a handful have just a single investment in their portfolio.
Top 10 holdings among ISA millionaires with AJ Bell:
Junior ISAs
The data also examines JISA holders on the AJ Bell DIY investment platform that have built up a large account worth £100,000 or more.
The youngest JISA holder with £100,000 or more to their name is just 6 years old, although most are in their teens and many will have benefitted from contributions made to their account since birth.
They tend to hold fewer investments than ISA millionaire peers, with the most popular investments including F&C Investment Trust, Scottish Mortgage, Fundsmith Equity and Threadneedle Global Smaller Companies.
Lifetime ISAs (LISAs)
LISAs are one of the most recent iterations of the ISA account, with the government introducing them from April 2017.
As a result, investors have had less time to grow such sizeable accounts. Nonetheless, some have built accounts worth more than £50,000.
The youngest LISA Super Investor is just 24, while the average age is 37. It likely reflects the fact that LISAs must be opened before the age of 40, with the aim of using the account for a house purchase, or as a pot of money to access from age 60.
The largest LISA accounts are worth over £160,000, a remarkable sum given the limited time LISA accounts have been available.
Gender investing gap
The figures show that ISA Super Investors are disproportionately male, although only by a relatively small margin. Just over two thirds (69%) of AJ Bell ISA millionaires are men – figures from HMRC show that 60% of all stocks and shares ISA contributions are made by men.
Women account for just over half of all ISA holders across the UK but tend to be more likely than men to hold a Cash ISA, rather than an investment account.
AJ Bell helps women invest through its Money Matters campaign, which offers free webinars, events, articles and podcasts aimed at supporting women to start investing for their future. (https://www.ajbellmoneymatters.co.uk/)
AJ Bell managing director, Charlie Musson, says:
“ISA millionaires are a fascinating group and they can teach us a few things about the basics of investing, as well as providing a tantalising glimpse of what’s possible through a combination of regular contributions, patience and perhaps a bit of good fortune too.
“First, time is an investor’s best friend. The more you have of it, the better. Most millionaires tend to be older because they’ve benefited from decades of compound growth. If you aspire to an ISA million, it is best to get started as early as possible and do so with a ‘get rich slow’ mindset.
“Second, there is no guaranteed recipe for success. Some investors invest in highly diversified portfolios, while others have just a handful of positions. And while shares and trusts are especially popular among ISA millionaires, there are plenty using funds too. The important thing is to invest in what you feel comfortable with and understand the level of risk you are taking in return for the potential reward.
“Finally, the success enjoyed by the Super Investors helps to illustrate the beauty of ISAs and the benefits they can deliver for all investors. They are very easy to open and get started with and all income and investment growth generated are received tax free.”
Laura Suter, director of personal finance at AJ Bell, adds:
“The fact that almost 70% of ISA super investors are men again highlights the gender wealth gap in action. Much of this will be down to historical factors, with many of these men contributing to their ISA during an era where men were the main breadwinners and women were more likely working in the home. But even today we know that women are more likely to save into a cash ISA rather than invest their money – meaning they are financially poorer over the years, missing out on investment returns.
“We want women to be armed with all the information and inspiration to take action with their money, whether that’s saving more, engaging with their pension or starting to invest. The Money Matters website collates all this information into one place, as well as giving people the ability to sign up to our newsletter, to receive their monthly dose of investing inspiration.”