Chris Palmer is 35. By the age of 26, he already had £100,000 held in ISAs. After emptying his accounts to buy a home, he’s now amassed almost another £180,000 – and wants even more.
Mr Palmer, who runs a YouTube channel as well as a freelance website design business, has £155,000 in regular stocks and shares ISAs, £23,000 in a lifetime ISA and a further £120,000 in a self-invested personal pension.
His ultimate aim is to grow these so that he has £1m well before he hits state pension age, as he is aiming to retire by the age of 60.
Mr Palmer, who lives in Wrexham with his partner, still puts close to the maximum of £20,000 into ISAs – which are exempt from tax – every year.
He says in theory, he could make his £1m within a decade, but that it may take longer.
Even if he made his £1m in ISAs alone though, he would still have far less than some of the biggest ISA investors in the UK, according to newly released figures.
A freedom of information request by InvestEngine has shown that the top 25 highest-value ISAs in the UK now hold a combined total of £222m.
It means they each hold on average £8.9m.
Experts say the number of so-called ISA millionaire will increase over the next few years too.
Though he’s taken risks in the past, Mr Palmer says he is now opting to take a less adventurous strategy.
“Now, to reach my goal, I’ll go for reliable index funds,” he says.
He says that he once lost £21,000 investing in a Russian index fund in January 2022, just before Russia invaded Ukraine.
“My risk appetite used to be higher than it is now, but this was sort of the tipping point for me. I can’t afford years more of mistakes,” he explains.
Despite saving large portions of his income, he says he tries to put aside some money for enjoyment purposes, rather than just investing it all.
“I definitely do spend money and enjoy life and I always have done that, I just don’t waste money. I spent £10,000 going to Bali a few years ago for example,” he says.
“I just don’t waste money. I don’t have car finance or expensive phone contracts.”
Invest Engine’s data request has come after a period when the future of the cash ISA has come under scrutiny.
Rachel Reeves has confirmed she is considering putting new curbs on cash ISAs in a drive to encourage savers to put their money into more productive – but riskier – investments.
The Chancellor promised to “create more of a culture in the UK of retail investing” when asked whether she would change the tax rules at the next Budget.
ISAs are essentially tax-wrappers, but people can put their money within ISAs in cash or stocks and shares.
Stocks and shares ISAs can deliver better returns over time, but you can lose money with them too, whereas cash ISAs offer guaranteed growth.
Those who have become ISA millionaires have used stocks and shares ISAs, because of the potential returns, but Chris says there are downsides to cutting cash ISAs.
“It’s a good and bad idea. The pros are it would get more people investing, but a lot of people just don’t know what to do with their cash. At least at the moment, people who aren’t confident are getting something in their cash ISA,” he says.
Andrew Prosser, head of investments at InvestEngine, said: “A quarter of a century on from their launch, ISAs continue to be a crucial vehicle for so many when it comes to growing their wealth over time. We are now seeing that approach paying dividends, with the rapid increase in the number of both ISA millionaires and now multi-millionaires.
“Given the comparably limited long-term potential of cash ISAs, even for those who have maxed their accounts since their inception and received good interest rates, we can be confident that those attaining millionaire status have invested tax free in the stock market via their ISAs.
“The findings are a reminder of the value that investing early and consistently in a diversified portfolio can bring when it comes to growing long-term wealth and why more people should consider investing as a way of reaching their financial goals.”
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