ISA millionaires are increasing year on year following a “bumper year” for investments, new data shows.
On interactive investor (ii), the UK’s second-largest investment platform, the number of ISA millionaires has surged to a “record high” of 1,001, according to the firm.
As of January 2024, the total is up 17 percent from the 852 recorded at the same time last year. Delving into the stats, the average age of an interactive investor ISA millionaire is 74, compared to an average age of 57 for the overall ISA cohort.
Myron Jobson, a senior personal finance analyst at interactive investor (ii), commented: “With the average age of 74 for ISA millionaires on our platform, it is clear, that time, patience and the magic of compounding returns are the not-so-secret strategy to becoming an ISA millionaire.
Mr Jobson noted that ISAs have become a “game changer” for wealth generation, which have created “thousands of millionaires”.
“Admittedly, you’d need to be able to afford to invest significant sums, but the principle of patience and diligence is also enriching for those investing more modest amounts.”
How ISA millionaires invest
According to ii, the platform’s ISA millionaires have a higher-than-average weighting to investment trusts.
These account for 42 percent of the average portfolio – greater than the average of 24 percent for its broader ISA customer base. This comes at the expense of funds, which make up 11 percent of the seven-figure ISA portfolio.
Mr Jobson said: “Our ISA millionaires also notably have a relatively modest weighting to cash in their ISA, accounting for under five percent, on average – almost half that for the broader ISA customer base (eight percent).
“This suggests that while cash plays an important role in portfolio diversification, our ISA millionaires are intrinsically focused on investing.”
When do ISA millionaires invest and how often?
According to ii, its ISA millionaires “typically” make the most of the reset ISA allowance at the start of the new tax year.
Some 40 percent of the total 12-month subscriptions from ii’s ISA millionaires were added between April 6 and April 30 April 2023 – compared to 23 percent among all ii ISA customers.
Mr Jobson said: “Our data shows that the ISA millionaire status is typically achieved through a well-diversified portfolio rather than cherry-picking risky bets.
“Millionaire ii ISA holders also tend to be early bird investors, giving their money more time in the market to work hard for them and reap the rewards from compounding returns.
“Another good option is to drip-feed your investments on a monthly basis to remove some of the risk of market timing, and it is also well suited to those with smaller sums to invest.”
