A growing number of savers who have stocks and shares ISAs are finding that they are becoming ISA millionaires, boosted by a quickly rising stock market.
Including reinvested dividends, the FTSE All Share index gave a return of 22 per cent over the 2016-17 tax year.
The UK’s largest stockbroking firm has reported that the number of ISA millionaires on its books has doubled in the last year, with the stock market appearing buoyant in the aftermath of the Brexit vote.
Jonathan Watts-Lay, of financial education provider, Wealth and Work, told the Telegraph: “There are more people who will pay into ISAs and in larger amounts. One of the key drivers is people reaching their pension limits – either annual or lifetime.
“In some cases, employers are giving them money that otherwise would have been paid into a pension but can’t be, to do whatever they want with. The wisest thing to do with that is use up as much of the ISA limit as possible each year.”
Achieving millionaire status with a stocks and shares ISA will have taken those who have done so many years of paying in up to the full allowance. Until 2010, this limit was £7,200 annually and is now £20,000.
This means that someone opening an account today, with a view to becoming an ISA millionaire, would need to be able to pay in £20,000 a year for 22 years and benefit from seven per cent growth annually.