There are over 2,000 ISA millionaires in the UK, and I’m aiming to join this group of savvy investors. My Stocks and Shares ISA might be a tad smaller right now, but I’d hope to reach £1m before I retire.
It might sound like a very large number. But with regular contributions over 25 years, it’s quite a reasonable goal, in my opinion.
There are a few points to consider though.
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Growing an ISA
On average, the long-term stock market return is said to be around 10%. But it could also be smaller than this and I could even lose money. On the plus side though, there are ways to give it a boost.
Looking back at the best performers of the past decade, I note that the tech-focused Nasdaq index achieved a gain of around 15% a year. That’s despite several downturns and recessions.
I also note that several FTSE 100 shares managed to return over 20% a year.
Bear in mind that the winners of the coming decades may not be the same as in the past, and future returns aren’t guaranteed either.
That said, by investing in a basket of high-quality funds and shares, even just a few big winners could boost my average portfolio gain.
That’s why I’m aiming to average 15% a year for my Stocks and Shares ISA. I calculate that by investing £400 a month it would take around 25 years to reach millionaire status.
Currently, there’s a maximum contribution limit of £20,000 a year. If I was able to invest this larger sum instead, I’d possibly be able to reach my goal a decade sooner.
Innovative stocks
Looking at the coming years, there are multiple themes that I think will be in focus. These include artificial intelligence, healthcare, defence and energy.
Global companies that can innovate and produce new solutions to the world’s problems within these focus areas could do well.
Many of these will be found in the Nasdaq 100, in my opinion. That’s why I’d want to keeping buying shares in Nasdaq 100 ETF.
Quality UK shares
In addition, UK shares offer great potential too. To find the best shares might initially feel like hunting a needle in a haystack. After all, there are thousands of available options.
But with a goal to reach a seven-figure Stocks and Shares ISA, I’d focus on a few key qualities to hunt for the right shares.
These tend to have many of the following characteristics:
- A wide moat or competitive advantage
- High and consistent profitability
- Large return on capital employed
- Growing earnings
- A solid outlook
Top picks
Many UK shares meet these criteria, but a few that I’d buy today if I had spare funds include Games Workshop, Judges Scientific, Greggs, Rightmove, and Diageo.
These five profitable businesses all operate in different sectors too. That spreads my risk and avoids putting all my eggs in one basket.
Much can change with individual shares over the years. That’s why I’d need to monitor their progress and make changes where necessary.
Although picking shares can involve more time, I’ve found that it can be lucrative. And hopefully it will help me reach my £1m goal that little bit sooner.
