How To Be An ISA MILLIONAIRE

Matt | Personal Finance

How To Be An ISA MILLIONAIRE? | 3 Steps To Grow Your Wealth With ISAs In 2025 #investing2025 #wealthbuilding #financialfreedom   Did you know there are 4,850 ISA millionaires in the UK, with accounts over £1 million? It’s not as hard as you might think to join this group   In this video, I share 3 key steps and explain how it’s possible to reach millionaire status by investing in an ISA (Individual Savings Account).

Transcript

00:00Did you know there are over 4,000 ISA millionaires in the UK? That's anyone with over 1 million

00:06pounds in an ISA account. In this video, I'm going to cover three steps for how you can become an

00:11ISA millionaire too. And it's not quite as hard as it might sound. If you're new to this channel,

00:17I'm Matt. I've been a finance consultant for over 10 years, working for one of the top consulting

00:22companies in London. I now run my own company and on this channel, I talk all things personal finance.

00:28So let's get started. Firstly, for those not familiar with what an ISA is, it's a savings

00:34account which acts as a tax wrapper where any dividends, interest or capital gains that you

00:39earn are not taxed. And you can reinvest all the money you make, which means that your money can

00:45grow faster. Currently, the maximum you can put into an ISA is 20,000 pounds per year. That's across

00:51cash ISAs, stocks and shares ISAs and lifetime ISAs. So what are the steps to becoming an ISA

00:57millionaire? Step one is to pick the right ISA. There are a few different types of ISA accounts

01:02that you can pick. The most common are cash ISAs and stocks and shares ISAs. It's likely to be much

01:08harder to become a millionaire by only saving using a cash ISA, as the interest rates on the money that

01:14you put into the account is around 4% at the moment. The interest rates that banks off on cash ISAs

01:20does change over time, but it's unlikely to match what you can achieve by investing using a stocks

01:26and shares ISA. They allow you to invest in individual shares in a company or funds. And if you can

01:31invest with a long term mindset and ride the market ups and downs, then it can be a great way to grow

01:37your wealth. For example, on the S&P 500, over the last 30 years, the average annual rate of return is

01:44around 8%. So if we look at a comparison of these two types of ISA accounts, if George invested in

01:51a cash ISA at 4% interest and made contributions of £500 per month over a 35 year period, he would

01:58have around £450,000. That's pretty good going. However, if Elizabeth invested in a stocks and shares

02:06ISA, contributing the same £500 per month over the same 35 year period, but earning an 8% average

02:14annual rate of return from her investments, she would have over £1 million over double the amount

02:20of money. There is a risk with investing in the stock market, but investing with a long term mindset

02:26can help you achieve higher returns than a standard savings account. Step two towards becoming an ISA

02:32millionaire is to invest as early as you can and to maximise your contributions within your means.

02:37Currently, you can save up to £20,000 per year into your ISA account, and it would take you

02:4321 years to reach millionaire status if you were able to invest the maximum amount per year and based

02:50on an average annual rate of return of 8%. But being able to save £20,000 each year is not very realistic

02:57unless you're earning a high salary. If you're able to do this, then great, but don't be disheartened if

03:03you can't and you can only save smaller amounts. Let's look at an example of how you can still become

03:08an ISA millionaire without ever maxing out your ISA allowance each year. If you were able to

03:14gradually increase the amount you save per month as you got older and as your income increased,

03:20then an example of how you could get to £1,000,000 is by contributing and investing £200 per month

03:26between the ages of 25 and 34, £350 per month between the ages of 35 and 44, £550 per month

03:36between 45 and 54, and £750 per month between 55 and 64. Over that 40-year period, you would have made

03:46£1,000,000 based on an average annual rate of return of 8%. Now, the more you can invest at an earlier age,

03:53the less you'll need to invest later on to reach that £1,000,000 savings goal, as more of your wealth

03:59is generated by the market rather than money that needs to be contributed by you. And the final step,

04:05step three, is about investing with consistency rather than sitting on the sidelines trying to time

04:11when to buy at the perfect point, as you can end up missing out on significant returns on your money.

04:17Looking back at data over the last 30 years, if you had stayed fully invested in the S&P 500,

04:23your compound annual growth rate would be around 8%. That means you would have made on average 8%

04:30each year. And at this rate, your money typically doubles about every nine years. But if you were

04:36waiting for the perfect moment to invest and instead kept your money in a bank account,

04:40and as a consequence, you missed the best five days out of those 30 years, your returns dropped to 5.9%.

04:47If you missed the best 10 market days, your returns fall to 4.7%. And if you missed the best 30 days,

04:55your returns fall to just 1.1%. So unless you're retiring soon and you need to preserve short-term

05:01wealth, then if you can play the long game and invest riding the ups and downs in the market,

05:06then you'll have a much better chance of growing your wealth. One tip to help with consistency with your

05:12savings and investments is to set up a direct transfer each month once your pay comes in.

05:17That way you always budget for and set aside an amount to save and invest each month. So these are

05:23my three steps on how you can save and invest to become an ISA millionaire. I hope this video has been

05:28helpful. Feel free to leave any questions in the comments, give the video a like and subscribe to

05:34my channel. I'll see you on the next video.

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