- Could you become an ISA millionaire?
- Key tips for any type of investor
- Creating a £1 million ISA strategy and putting it into practice
- Investment performance league: the fund sectors delivering the top returns
- The two places in the world that helped an investor become a millionaire the fastest
Dan Coatsworth, head of markets at AJ Bell, comments:
“Becoming an ISA millionaire needn’t be a fantasy if you are diligent with saving and investing. It can become a reality in just over 21 years for those able to contribute the maximum allowed in an ISA each year and achieve a reasonable rate of return*. Even though you might have to make some sacrifices along the way, the rewards certainly make it worthwhile.
“Individuals can invest up to £20,000 in investment ISAs each year. Many people don’t have a lump sum and prefer to squirrel away some of their pay packet each month, which equates to £1,666.66 a month if you want to use the full annual ISA allowance. Someone putting away this amount and achieving a 7% investment return after charges would score £1 million after 21 years and 10 months in their ISA.
“Not everyone can afford to put the full amount into an ISA each year. A more realistic sum might be £1,200, which is roughly one third of take-home pay for someone earning £60,000 a year. Rent or mortgage payments, bills, and other spending account for the other two-thirds of their salary.
“It would take someone 25 years and nine months to hit £1 million in an ISA based on £1,200 monthly contributions and 7% annual investment returns after charges. If you’re in your thirties or early forties and feel like it’s time to get serious about investing, these figures could provide the pick-me up you need to form a plan and get going.
“For example, someone aged 35 might be advancing in their career and have money left from their pay packet to deploy in their ISA. Putting away £1,200 each month and taking medium risks could see them retire in style at 60 with a £1 million ISA, meaning they potentially wouldn’t have to dip into their pension until much later in life. Albeit you need to bear in mind the buying power of a million will be lower than it is today thanks to inflation.
“Could they hit the jackpot sooner? While 7% is a reasonable return to expect from investing, certain parts of the market have the potential to do much better.”
*Based on 7%* annual investment returns
The £1 million ISA investment strategy
“In our original calculation we said it would take 25 years and 10 months to reach £1 million, based on £1,200 monthly contributions at 7% annual return after charges. Using that as the blueprint, we tested different parts of the investment market to compare historical returns, selecting 10 different Investment Association sectors.
“Starting the exercise from 1 January 2000 and following the same £1,200 monthly contribution plan, investments in seven out of the 10 Investment Association sectors had hit the £1 million jackpot by the end of January 2026. One was a whisker away. The remaining investments short of the £1 million goal are both invested in bonds, which are traditionally a lower risk investment, and therefore likely to have lower returns over the long-term..
“For illustrative purposes we assumed the ISA allowance was consistent at £20,000 every year from 2000, although the allowance didn’t actually reach that level until 2017. Performance was based on total returns which looks at share price gains and losses, and dividends reinvested.
“It’s important to stress that starting on a different date could result in different performance trends, and that the following table isn’t an accurate guide to what could happen in the future. It’s merely a way of looking at what’s possible from investing over a longer period.”
How did the sectors perform?
“India was the most lucrative money maker for the £1 million ISA investment strategy, hitting the goal after just 15 years and eight months if you’d invested the full £1,200 monthly into only that sector, and exceeding £2 million after 23 years and nine months. The country has benefited from strong earnings growth, high levels of domestic consumption, improved corporate governance, and political reform.
“China was second best of the IA sectors for performance, hitting the £1 million goal in June 2020.
“In third place was North America, reaching £1 million in March 2021. The US stock market has been a fruitful source of returns for investments over the past two decades, driven by the tech sector.
“Rich equity valuations are now a key concern for both India and the US, and it was telling their main stock indices (BSE Sensex and S&P 500 respectively) lagged Brazil, Japan, Europe, UK and China in 2025.
“It took 24 years for an investment in the IA global sector to reach £1 million in our ISA test. Hot on its heels with a mere three extra months to hit the goal was Europe ex-UK, which might come as a surprise. Europe has a broad mix of sectors, ranging from banks and industrials to telecoms and healthcare. It has tech representation, but far less than the US.
“UK stocks turned in a solid return and were almost on the nose when it came to matching the average 7% annual return expected broadly from investments, as was Japan. Someone following our ISA strategy since 1 January 2000 and investing in the IA UK All-Companies sector would now have a pot worth £979,746, meaning they’re 98% of the way towards hitting the £1m jackpot figure.”
“That leaves two other IA sectors still on their million-pound journey. Multi-asset funds have grown in popularity as investors seek ‘all-in-one’ funds that provide exposure to lots of different things. Many of these products, such as AJ Bell’s funds and Vanguard’s LifeStrategy range, are available in different formats to suit the risk appetite of the investor. Higher risk versions have greater weighting to shares and lower risk ones have more exposure to bonds.
“The percentage range in the IA Mixed Investment 40-85% sector name refers to the stocks and shares allocation of the funds. Someone investing £1,200 every month into this sector since 1 January 2000 would have approximately £900,000. In comparison, a more cautious person who chose the IA Mixed Investment 20-60% sector would be seven-tenths of the way to the £1 million jackpot. The difference is explained by the latter having greater exposure to bonds, an asset class that traditionally delivers lower returns than shares.
“Holding mixed investments helps provide a balanced, diversified portfolio. For many people that’s going to be the right option and, although the data shows some sectors have delivered exceptional returns, predicting the winners at the turn of the millennium would not have been easy. A mixed investment portfolio helps avoid putting all your eggs in one basket.”
One sector versus a mix
“It’s highly unlikely an investor would choose just one of these sectors for their ISA. The exception might be to put all their money into a global fund, as that casts the net wide to get exposure to companies listed around the world, or a multi-asset fund. Alternatively, it’s plausible that someone might be happy to go all-in on the US, given the strong returns delivered in the past. It might not be everyone’s flavour of month now, but investors look years into the future, and there is a world beyond Trump even if he may disagree.
“Most people will take a pick ‘n’ mix approach, filling their ISA with goodies from around the world, and likely from a range of different asset classes. Diversification is an investor’s best friend as you never know when one part of your portfolio will need propping up by another bit.
“The key ingredient to investment success is consistency. Form a plan, don’t miss a monthly payment into your ISA, and stick with it through good and bad times. It’s just like eating healthily and exercising regularly – stick at it, and you could see big results.”
