How fast can I become a millionaire in Stocks and ISA Shares?

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There are about 2,000 millionaire ISA Shares and Shares in the UK. The most successful have raised over £6 million.

That’s fine for a scheme capped at a maximum of £20,000 per year. And it’s a lot less than it was in the early years.

So how fast can an investor like me starting today build an ISA million? It all depends on how much we save each year, and what profits we might get.

ISA decade

Over the last decade, ISA Shares and Shares have earned an average of 9.6% annually. It varies greatly, mind.

In the 2019-2020 Covid crash year, they lost an average of 13%. The following year, they earned 13%.

Plus, I think it shows how quickly stock market panic can subside — and how savvy, long-term investors can profit from it.

How many years?

That 9.6% may not be sustainable. But stocks have outperformed other forms of investment for more than a century.

So here’s a table showing the different sample annual returns. It also shows how many years it would take to build a million if we could save the full £20,000, spread out over the year:

Annual returnAnnual investmentAmount of year4%£20.000286%£20.000248%£20.0002110%£20.00019

Future returns

What are the possible future profits? A study by Barclays found that the UK stock market has been returning about 5% annually above inflation, over the long term.

Inflation is crazy right now, but hopefully it will be around 2% in the long term. So somewhere between 6% and 8% that seems realistic to me.

That timeframe is really within reach for many investors today. In fact, even those in their 50s may be successful before reaching retirement age.

Buffett’s year

While I’m here I thought I’d add an additional table, with just one entry. This is special only for billionaire investor Warren Buffett. Here he is:

Annual returnAnnual investmentBuffet year19.8%£2000013

Since taking the reins of Berkshire Hathaway in 1965, Buffett has posted an average return of 19.8% per year.

Anyone who fits that could pocket a million in just 13 years. Now yes, I know, none of us can match him. But it’s inspiring to see, don’t you think?

Easy money?

Now I don’t want anyone to think that’s a sure thing. They say past performance is not an indicator of future performance, and that’s absolutely true.

In particular, I think dividends could be erratic in the years to come. And many ISA millionaires rely on dividends for their success.

Still, there are plenty of UK stocks with dividends of 7%, 8% and more. And recent research from investment firm AJ Bell suggests 2023 could be the third best year for cash returns from FTSE 100 stock.

Whatever we may come up with, I think the ISA Stocks and Shares are the best way to find long term investors like me.