The number of Isa millionaires, those who count themselves lucky enough to have an Isa worth £1million, has soared in 12 months.
The most recent data shows there are now 5,070 Isa millionaires, up from 4,850 in 2022, according to a Freedom of Information request from money app Plum to HMRC.
Isa millionaire numbers have now increased by 1,026 per cent since 2016 when they stood at just 450.
And it’s not just the number of Isa millionaires which has surged, but the value of their pots too.
The 25 most dedicated Isa savers have managed to rack up pots averaging an eye-watering £11.3million each.
Last year the 25 biggest Isa savers had pots averaging £8.9million. It means the average pot of these Isa millionaires have grown £2.4million – 27 per cent – in the space of just 12 months.
Moneybags: There are now over 5,000 Isa millionaires in the UK, up from 4,850 in the 2022/23 tax year
Of the 5,070 Isa millionaires, 4,800 investors are sitting on pots worth between £1million to £1,999,999, while 200 investors have pots valued between £2million to £2,999,999 and 30 have pots between £3million to £3,999,999.
There are 50 investors with pots worth more than £4million.
The 5 per cent jump in Isa millionaires in the space of 12 months has been fuelled, in part, by the AI boom.
Rajan Lakhani, of Plum, says: ‘The Isa millionaire club just got bigger, with 220 new members joining its ranks thanks in part to the US-driven AI-gold rush.
‘There’s no question that the rise of the so-called Magnificent Seven – Wall Street’s leading tech stocks including Nvidia – have helped balloon the pots of armchair investors here in the UK in recent years.’
And despite talk of an AI bubble, demand for Magnificent Seven stocks – which includes the likes of tech giants Amazon, Alphabet and Nvidia, shows no sign of drying up.
Two thirds of Plum’s fund buy orders in the third quarter of this year were weighted towards the US market or tech giants specifically.
> Read more: Which provider has the best stocks and shares Isa?
A fortune of £11.3million could of course only be gained through investing in stocks and shares.
Figures from HMRC show that of the 4,850 Isa millionaires in 2022, 94 per cent of them are fully invested in stocks and shares.
The remaining 6 per cent were invested in mix of stocks and shares and cash. There are no known cash Isa millionaires.
Tips from Isa millionaires
This is Money has interviewed two Isa millionaires in the last year to hear of their blueprints for building an Isa worth £1million.
Lord Lee of Trafford, the UK’s first Isa millionaire and Ollie Price, who became an Isa millionaire at the age of 36 shared their tips and best advice for joining the £1million club.
1. Fully use your Isa allowance
The first step to becoming an Isa millionaire is maxing out your Isa every year.
This might be a struggle for most savers now that the Isa limit is £20,000, where it was raised to in 2017 from £15.240.
Figures from HMRC show that only 4 per cent of Isa savers max out their Isa. But those who are able to achieve this will be well on the road to becoming an Isa millionaire.
‘I’ve been investing since 1987’, said Lord Lee, ‘those who started early like me had an advantage.’
While Mr Perry says he used most of or all his full Isa allowance to invest every year for 11 years between 2013 and 2024.
2. Learn about investing and what you’re investing in
One thing Isa millionaires have in common is that they do their research and have conviction in the stocks they choose to invest in.
Mr Perry’s strategy was to focus on individual stock picking in industries he understood, backed by research which he says allowed him to spot high-potential opportunities.
He says: ‘Before you even start to put £10 in an Isa do some research about investments.
‘There’s a lot of value in understanding how stocks have performed, what inflation is and how it erodes the value of money.
While Lord Lee is a veteran stockpicker.
> Read more: Investing for beginners
3. Reinvest dividends
When it comes to generating long-term investment returns, compounding – through the automatic reinvesting of dividends – can be a powerful tool.
By reinvesting dividends, you reinvest the cash you would have been paid out as a dividend to buy extra shares in the company rather than receiving the dividend as cash to your bank account.
And that has been one of Lord Lee’s key tactics.
4. Be brave for market-beating growth
It’s unlikely that Isa savers with pots amounting to over £11million have been investing in index trackers over the years. Instead, they had some serious successes on the way and gains were locked-in, from individual shares.
For example, Lord Lee invested in Cerillion, a telecoms company, when it was first listed on the stock exchange in 2016.
Its share price on 18 March 2016 on its first day of dealing was 98p while today, it has risen to 1,935p.
While Mr Perry invested in tech-disruptor gambling company Betfair at the start of his investing journey in 2013.
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