The millionaire threshold of wealth is often used to measure some sort of arrival, especially when based on hard currencies like the pound or usd or euro. So, it is often actively tracked. In the UK, there are approximately 3.1 million millionaires (1).
How you achieve your millionaire status is another interesting data that’s tracked. In the UK, one of the ways to do that effectively is to utilise the Individual Savings Account (ISA) for its tax efficiency.
This account allows you invest up to £20k per year that would be free from all forms of taxes. As a result, it’s a popular account in the UK, used often for building wealth. 12.4 million adults (2) hold the account, about 24% of the adult population.
I’ve always been curious about how many of these ISAs are worth at least a million pounds. For context, if you only saved and earn no interest on this account, it would take you 50 years of saving the max allowance, £20k, to accumulate £1 million.
On the other hand, with an average annual return of 7%, it would take 22 years — saving the max amount.
The FT (3) reported a few days ago, using the latest data available from 2023, that there now 5,070 ISA millionaire. 0.04% of the adult ISAs and 0.16% of the number of millionaires in the UK. The top 25%, about 1,300 individuals have an average of £11.3 million in their account.
The number is interesting. And I believe the 5,070 is a small amount. Mainly because most don’t invest their savings. Only about 30% is in the Stock ISA. Also, tells about how difficult it is to hit the number.
Those who have £11 million in their account are investing though. Over a 40 years of saving £20k consistently, they would have need a CAGR of about 7% to have hit that number. I would bet the timeline is shorter, the capital is lower.
Therefore, they must have done amazingly well over their lifetime as an ISA investor to achieve that outcome. Absolute legend, and absolute respect for them.
If you want to learn how others have done it, Guy Thomas’ “Free Capital: How 12 Private Investors Made Millions in the Stock Market” is a great option. I read it last year and found it very helpful to see the behind the scenes for 12 millionaires, 6 of which used Stock ISA to achieve their millionaire status. Very importantly, they also used different approaches.
Sources:
- The Investors Centre – How Many Millionaires Are There in the UK?
- Gov.UK – Commentary for Annual savings statistics: September 2024
- FT – Number of Isa millionaires hits 5,000 – (made free to read)