Becoming an Isa millionaire may be a pipe dream for many investors, but it’s not an impossibility. Just think about the financial empowerment it would give you: an investment pot free from tax that you can access when you want to without worrying about withdrawals being subject to income tax as with a pension. Financial bliss, financial nirvana.

Latest figures from Revenue & Customs indicate that there were more than 7,700 investors with Isa portfolios valued at £1million plus in April 2024, a jump of 50 per cent on the previous year. And with stock markets having advanced by some 25 per cent since then, the number of Isa millionaires will have grown well into five figures.

Certainly, at an investor meeting that Money Mail attended earlier this month, organised by Edinburgh Investment Trust, a number of attendees were proud to call themselves either Isa or investment millionaires, among them 75-year-old Stephen Pavey from Brighton, East Sussex.

He first owned shares jointly with his late mother 60 years ago and still holds them (Imperial Metal Industries) and the certificate to this day.

Stephen’s investments, comprising a mix of Isas, self-invested personal pensions and a significant standalone holding in stock market listed trust F&C, mean he is closer to being an investment millionaire twice rather than once over. You can read his list of tips and how he invests in the box below.

According to Stephen, a retired director of finance at the University of Sussex and a patron of the magnificent Brighton Pavilion, the secret behind his investment success was to start investing in earnest in his early 30s, keep investing through thick and thin, and hold a diversified portfolio of investments.

Stephen Pavey, 75, a retired university finance director, is proud to call himself an Isa investment millionaire

‘I’m a big fan of legendary American investor Warren Buffett,’ he says. ‘Buy and hold is a key part of his investment strategy and it’s proved successful for me. I don’t mind if the market zigzags up and down – that doesn’t shake me – staying invested through all weathers is what achieves results.’

Stephen has built up a pot that is more than enough to enjoy a luxurious lifestyle of fine dining, exotic holidays and shopping trips.

But these are not his priorities. Instead, he is passionate about what his savings could achieve through the charitable donations he plans to make to causes close to his heart.

He also enjoys the investment process itself. ‘Investing keeps me informed about what is going on in the world,’ he says. ‘When I go to fund and investment trust Annual General Meetings, managers share their latest thoughts on trends such as AI – so I often learn about such social issues and changes far sooner than I might have otherwise.’

The first investor to become an Isa millionaire was John Lee, now Lord Lee of Trafford, in 2003. He built his Isa pot on the foundations of the Personal Equity Plan (Pep), the precursor to the Isa.

Today, the 84-year-old, author of the book ‘How to Make a Million Slowly’, remains passionate about investing and below gives his top tips – alongside those of Stephen – on how you can join the Isa millionaire club. Essential reading.

‘Yes, you need to think long term,’ he says, ‘and be prepared to invest a chunk of your take home pay every month rather than spend it – and be deadly committed. But with patience and a fair investment mind you can get there.’

Here, we show how you can join the Isa millionaire club – or at worst, build an Isa pot to steer you through retirement with a degree of comfort.

How to become an Isa millionaire

Money Mail asked wealth manager JM Finn to do some serious number crunching on Isas.

First, we got them to calculate the investment pot that you could build at age 65, assuming you are currently aged 21, 25, 35, 45 or 55.

We’ve chosen age 65 because it is around this point that most people start to switch from accumulating wealth to deploying it for retirement purposes.

Yet there is nothing to stop you continuing to use your Isa allowance as you move through retirement. Stephen, for example, still uses as much of his Isa annual allowance as he possibly can – and invests rather than saves into cash.

Using information from the latest Isa statistics published by Revenue & Customs on typical annual Isa subscriptions and Isa values, we assume an annual Isa contribution of £8,000 for all age groups – made at the start of the year – and that at each age they already have an Isa. These are respectively valued at £8,000, £10,500, £14,000, £25,000 and £41,000.

We also asked JM Finn to do the same sums, but for an investor investing £650 a month. Most investors prefer to invest regularly because they can use their pay to fund Isa contributions.

Stephen still uses as much of his Isa annual allowance as he can – and invests rather than saves into cash. He is pictured in front of Brighton’s Royal Pavilion of which he is a patron

We then got JM Finn to look at the outcome if investors turbocharged their Isa contributions. Although the investment returns you enjoy from your Isa will be the biggest determinant of how big your pot will grow to, how much money you feed into the tax wrapper is also key.

The more you put in, and the earlier you do it, the greater the chance you give yourself of building a sizeable Isa.

So we asked the wealth manager to work out the Isa pots that our five investors could look forward to building by age 65 if they invested £16,000 annually or £1,300 monthly (equating to an annual sum of £15,600) – and had already assembled Isas respectively worth £24,000, £31,500, £42,000, £75,000 and £123,000.

In terms of investment returns, JM Finn calculated two values for the Isas at age 65: using first an annual return of seven per cent (in line with long term returns from equities) and then a higher return of ten per cent (based on returns in more recent years).

The final figures that JM Finn produced for Money Mail were the ages at which our 21, 25, 35, 45 and 55-year-olds could become Isa millionaires.

Of course, there are many assumptions used in arriving at these figures which may not play out in reality. For example, future annual investment returns may not average out at 7 or 10 per cent.

Furthermore, there is no guarantee that future governments will keep Isas as they are: they could cut the annual £20,000 allowance or diminish the tax breaks. Also, the analysis excludes the erosive impact of both inflation and Isa plan charges.

But the numbers that JM Finn has come up with should, at the very least, inspire you to use as much of your annual Isa allowance as possible (finances, permitted) to invest for your financial future.

In so doing, you will give yourself a fighting chance of joining the Isa millionaire club.

How long it could take you

The outcomes for our Isa investors are provided in the tables.

For example, our 21, 25, 35, 45 and 55-year-olds, investing £8,000 a year into their stocks & shares Isa would produce respective Isa funds at age 65 of £2.61million, £2.01million £0.99million, £0.49million and £0.22million (all figures rounded).

This assumes they had existing Isas valued as mentioned (£8,000, £10,500, £14,000, £25,000 and £41,000) and that annual investment returns were 7 per cent.

In terms of ‘becoming’ Isa millionaires, they would reach this milestone at ages 52, 56, 66, 75 and 83.

Yet, if the annual Isa returns were higher at 10 per cent, these same investors would enjoy far bigger Isa pots at age 65 – and become Isa millionaires much earlier.

Their respective Isas would be worth £6.91million, £4.82million, £1.87million, £0.75million and £0.28million – and they would be Isa millionaires at ages 46, 50, 59, 68 and 77.

For those turbocharging their Isa contributions – and with bigger starting Isa pots – the outcomes are even better. The figures in the table indicate that with an annual investment return of 7 per cent, our 45 and 55-year-olds would achieve Isa millionaire status at 65 and 73 respectively.

The more you put in, and the earlier you do it, the greater the chance you give yourself of building a sizeable Isa

For our regular investors putting £650 a month into their Isa, the 21, 25, 35, 45 and 55-year-olds would become Isa millionaires at ages 53, 57, 66, 75 and 84 respectively, assuming annual investment returns of 7 per cent. This assumes starting Isa plans worth £8,000, £10,500, £14,000, £25,000 and £41,000 respectively. At 10 per cent, they hit the Isa million pound jackpot earlier: at ages 47, 50, 60, 69 and 77.

For those investing £1,300 a month and starting with bigger Isa pots, they get to Isa millionaire status much earlier: 44 for our 21-year-old, 73 for our 55-year-old if annual investment returns are 7 per cent: 40 and 69 if annual returns are 10 per cent.

Invest for youngsters for exceptional results

Of course, all our analysis so far has excluded Junior Isas (Jisas). These allow parents (also, grandparents, godparents and friends) to invest £9,000 a year in a tax-free wrapper on behalf of their children.

From age 18, the child can then start to invest in a stocks and shares Isa with the maximum annual investment set at £20,000.

Many parents underestimate the investment power of Jisas – and the financial empowerment they can give their children in later life – or when they embark on further education, enter the workforce or look to buy their first home.

If we assume £2,000 of the annual £9,000 Jisa allowance is used to invest every year up until age 18 – and then £8,000 is invested annually in a stocks and shares Isa thereafter – an Isa worth £4.9million would have accumulated at age 65. This assumes 7 per cent annual investment returns. At 10 per cent, the pot at age 65 would be a mind-blowing £18.18million. They would be Isa millionaires at age 43 and 36 respectively. Mind blowing.

JM Finn says: ‘The best time to start an Isa may have been years ago, but the second best time is today. The numbers we have crunched for Money Mail clearly show that it is never too late to start investing.

‘Even if someone has nothing in an Isa by the time they are 50, they could still reach the million pound mark by the time they’re 71 if they invest the maximum £20,000 into an Isa and profit from annual investment returns of 7 per cent. It would make a super retirement pot alongside a pension.

‘Any advice we give to clients starts with making sure they use all tax-friendly allowances available to them. When it comes to accumulating wealth, Isas and pensions are the go to vehicles. Use them.’

Nine tips to put you on the road to becoming an Isa millionaire

Money Mail asked successful investors Lord Lee and Stephen Pavey to come up with tips on how to become Isa millionaires. They’re simple, common-sense advice.

1. Start a stocks and shares Isa as soon as you can. This also applies to children. Set up Jisas for them and use the tax-free wrapper to invest, not save cash. Grandparents, godparents and friends can also lob money into the Jisa pot on the child’s behalf. 
2. Invest what you can afford. ‘Investing £50 is not like spending £50,’ says Stephen. ‘Your bank account may be £50 lighter, but by investing you have given yourself the chance to turn £50 into a much bigger sum over the long-term.’
3. Try and use a chunk of your Isa allowance every year. ‘It’s a use it or lose it allowance,’ says Lord Lee. ‘Use as much as you can.’
4. Build a diversified Isa portfolio. For example, Stephen has a mix of 15 shares and investment funds – stock market listed investment trusts – in his Isa. Shares such as Tesco, Unilever and Compass – and trusts that are invested in the UK (Edinburgh, Finsbury Growth & Income, Merchants) and globally (the likes of Murray International and Scottish Mortgage).
5. In terms of UK shares, look for profitable companies paying dividends. Then reinvest the dividends in more shares, either automatically or by using the income to buy shares in other companies. ‘Compounding is very important,’ says Lord Lee.
6. Don’t chop and change holdings when markets are volatile. Hold for the long term. But Lord Lee says: ‘If a holding is showing a loss and you feel you have made a mistake, dispose of it quickly.’
7. Try not to take out money from your ‘tax free’ Isa pot while you are building retirement wealth.
8. When it comes to funding your retirement, think about how you will use your Isa pot. ‘Don’t do nothing,’ says Stephen. ‘The temptation is to leave it untouched, but you should get enjoyment from the Isa wealth you have built through hard investing. Plan what you want to do with it ahead of retirement – and don’t feel guilty about using some of your Isa wealth to fund lifetime dream such as luxury holidays. ‘Also, think about it in terms of your overall inheritance tax planning and passing down money to family – or gifting money to charities.’
9. Take an interest in your Isa. Stephen says: ‘I’ve learnt a lot about investing from attending the annual general meetings of the companies that I hold – and listening to the views of both fellow attendees and investment managers. As a result, I’ve become a shrewder investor and now even help some of my neighbours with their investment portfolios.’