ISA investing: here’s why I’m buying UK shares to retire in comfort!

We’re all looking to build a handsome nest egg for retirement, right? Well this is how I’m using ISAs so I can eventually retire in comfort.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

I don’t believe in investing my hard-earned cash in low-paying savings products like Cash ISAs.

Okay, I have a Cash ISA which I use for holding money temporarily before making a big purchase and for retaining emergency cash. But using this sort of product as a means of saving for retirement is a recipe for disaster, in my book. This is why the majority of the money I earn is used to buy UK shares in a Stocks and Shares ISA instead.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

The pros and cons of Cash ISAs

Let’s look at the best-paying, instant-access Cash ISA currently on the market. According to,  that’s the Marcus account from Goldman Sachs — offers an interest rate of just 0.5%.

The advantage of investing in a cash product over something like a Stocks and Shares ISA is of course that the £1 I choose to park in it will still be worth £1 in five, 10, even 50 years. Conversely, who knows what the £1 worth of shares I buy in my Stocks and Shares ISA will be worth decades from now. Stock markets go down as well as up and the value of my holdings could be worth considerably less that I’d be hoping for.

Poor returns

But here’s the problem with using a Cash ISA to try and retire in comfort. Those earning even a decent salary are unlikely to make enough to live out their post-retirement dreams with such low-yielding products.

Let’s say that someone aged 30 manages to squirrel away £300 a month for their retirement. Using that 0.5% from Marcus as an example, over the next 35 years, that person will have made £137,669.

That’s better than a hole in your pocket, clearly. But dig down a little deeper and that figure suddenly doesn’t look so enticing. Firstly, for those looking to buy an annuity (a monthly pension payment until death) that sort of figure would barely cover the basic cost of living.

According to Which?, a single person would need a retirement pot worth £123,365 to have an annual income of £13,000 through a combination of the State Pension and annuity payments.

Couple relaxing on a beach in front of a sunset

How to retire with cash to spare

And secondly, the amount I can expect to make with a Stocks and Shares ISA smashes what I’d likely end up with by saving in a Cash ISA. Let’s say that person invested £300 per month on UK shares instead. Over the same 35 years, they could expect to have built a retirement pot worth a much-improved £692,694.

That’s based on past form that shows the average long-term UK share investor makes an average annual return of 8%. This sort of pot would provide an annual income of £31,000 if an investor were to buy an annuity at the point of retirement, according to Which? And it would allow them to live a “luxurious retirement,” it says.

I think stock investing is the best way to make money for the future. There are plenty of top UK shares to help investors retire in luxury, like these identified by The Motley Fool analysts.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

University graduate student diploma piggy bank
Investing Articles

Should I be concerned about the windfall tax for my BP shares?

What does the new UK windfall tax mean for the BP share price? Michelle Freeman digs into the details to…

Read more »

Buffett at the BRK AGM
Investing Articles

What Warren Buffett’s wisdom and investing in stocks will teach you about life

Investing is a journey of self-discovery. So what will stocks and the words of legendary investor Warren Buffett teach you…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

5 ‘no-brainer’ income stocks to buy today!

Amid soaring inflation, I'm looking at these income stocks, offering big yields, to grow my portfolio.

Read more »

Trader on video call from his home office
Investing Articles

How I’d buy the dip in quality UK stocks with £750

Jon Smith explains the concept of buying the dip, and talks through the UK stocks he's going to buy at…

Read more »

Woman looking at a jar of pennies
Investing Articles

5 UK penny shares to buy with £5,000 today

It's hard to remember a time when there were as many tempting penny shares around as now. Here are five…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

The Scottish Mortgage share price keeps falling. Should I buy?

The Scottish Mortgage share price has collapsed from its all-time high in little more than six months. Is it now…

Read more »

UK money in a Jar on a background
Investing Articles

Value investing isn’t dead! My top stocks to buy as inflation hits 9%

As value investing principles come back into fashion, Andrew Mackie looks at the current backdrop and shares what he's investing…

Read more »

Windmills for electric power production.
Investing Articles

Which FTSE 100 shares would I buy to offset higher fuel bills?

Rishi Sunak unveiled a windfall tax this week, hitting shares of energy firms, and especially oil & gas producers. But…

Read more »