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The (more realistic) ISA millionaire?

Important information: The value of investments, and the income from them, can go down as well as up, so you may get back less than you invest. The tax treatment of ISAs depends on individual circumstances and all tax rules may change in the future.

Making the theory fit with real life

Daniel Lane, Fidelity Personal Investing, 19 February 2020

When you’re a writer with an interest in investing sometimes you just want to put down in black and white how the numbers can really rack up over the long term. It can be an opaque business so it’s nice to be able to lay it out in simple terms when you can.

The problems crop up when, even with all the maths behind you, the numbers we use to illustrate the journey to a million-pound savings pot, for example, still seem overly ambitious, or out of touch with most people’s ability to save. Cue the quite understandable eye-rolls.

That’s why it was great to see a different approach from the team here at Fidelity - one that feels a lot more pragmatic.

Still looking at that goal of reaching £1million through investing in an ISA, our analysis found that you don’t need to start saving wild amounts from the start. In fact, if you were to put £2,500 into a Stocks and Shares ISA each year from the age of 25, increasing this amount in your thirties, forties and fifties - with assumed rises in earning potential - you could hit the £1million mark by the age of 64. We’ve used a 5% annual growth rate in our example, which is quite conservative but isn’t guaranteed due to the ups and downs in the market.1


Annual ISA contributions









Calculations based upon assumed annual growth rate of 5% and applying Fidelity International platform charges.

This means your monthly savings plan would come in at £208.33 initially, doubling to £416.67 in your thirties and so on. Whereas previous studies might have focused on investors putting in the full £20,000 from the get-go, these figures will feel a lot more achievable for many savers and investors.

Setting up a monthly savings plan means your ISA contributions become a regular part of your payday budget. And while the numbers do get larger down the line, and we all have other things vying for our money at the same time, I think the main message here is just how effective it is to start investing early, and regularly, even if you don’t end up filling up your ISA in your fifties.

Each of our personal investing amounts will be different, as will our goals and risk tolerance, but the value of giving your money the time it needs to compound over the long term is undeniable.

I think another important aspect of this analysis is that it’s clear investing is not just the preserve of the already-wealthy. Even by contributing as little as £50 a month you could generate £19,818 in 20 years - you don’t need to start off with a lot of cash, just a lot of time. What’s more, the long-term compound effect on investing even small amounts remedies the feeling of “why bother?” especially among young people contending with daunting goals like house deposits and lengthening retirements.

So, all in all, quite an encouraging look at long-term investing I’d say. The important part is making it work for you though, and even if your goal isn’t to tip into seven figures, whatever it is, it’s worth getting started early.


1Fidelity International, January 2020

Important information

Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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