The number of ISA millionaires has skyrocketed by 61%, with figures jumping from 1,001 in January 2024 to an impressive 1,607 by February 2025, according to investment platform interactive investor (ii).
The rapid growth of ISA millionaires underscores the power of long-term investing and the benefits of tax-free savings in ISAs. But what’s the secret behind this rise? According to financial experts, it’s a combination of time, patience, and the magic of investment compounding.
The Magic of Compounding
The key to building wealth in an ISA is compounding—where your initial investment earns returns, and then those returns start generating their own returns.
Over time, this snowball effect leads to impressive growth. The average age of an ISA millionaire is 73, showing that many of these investors have benefited from decades of compounded growth, with some holding capital dating back to when TESSAs and PEPs were the tax-efficient investment vehicles of choice.
Myron Jobson, Senior Personal Finance Analyst at ii, said: “ISAs have been a game-changer for investors. The recipe for building a seven-figure ISA portfolio is patience. The average age of an ISA millionaire underlines this: time in the market is key.”
How ISA Millionaires Invest
Investors in the ii platform typically choose a mix of asset classes, with investment trusts, equities, and funds being the most popular. However, ISA millionaires are more inclined to invest in higher-yielding assets than the average investor. On average, 41% of their portfolios are in investment trusts, compared to 34% for other ISA holders. Equities make up 35% of their portfolios, while funds make up just 13%, lower than the 22% of other investors.
A key factor in their success is a focus on high-dividend stocks, with companies like Legal & General, Aviva, and BP making up a significant portion of their portfolios. These investments provide both capital growth and a steady stream of income, driving their portfolios forward.
Reaching the Million-Pound Mark by 65
For those dreaming of ISA millionaire status by the time they turn 65,assuming a 5% annual growth rate and annual increases in contributions, a 25-year-old would need to invest £6,000 in the first year, increasing their contributions by 2% annually. Over time, they would contribute £362,400 to reach the £1 million target.
However, for those over 42, the required annual contributions would exceed the ISA allowance, making it a harder goal to achieve.
Myron Jobson explains: “The sooner you start investing, the more you can harness the power of compounding returns. Even small, consistent contributions can snowball over time. But it’s also important to factor in inflation—£1 million today won’t have the same purchasing power in the future.”
With inflation eroding the value of money over time, starting early is key not only for compounding returns but also to ensure your investments grow enough to keep up with rising prices.
So, whether you’re just starting out or have been investing for years, the path to becoming an ISA millionaire is clear—patience, compounding, and smart investing. The sooner you start, the easier it becomes to hit that million-pound mark.
