No savings at 30? I’d use a Stocks and Shares ISA today to aim for a million!

If I started my investing journey at 30, I’d open a Stocks and Shares ISA now to harness the power of compound returns over a lifetime.

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.

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It’s never too late to start investing in stocks. If I were to make my first foray into the stock market at 30 with big ambitions, I’d set up a Stocks and Shares ISA to maximise my returns by minimising my tax bill.

In doing so, I reckon I could achieve the coveted status of being an ISA millionaire. But, that won’t happen overnight and I need a clear plan to reach that goal.

So, here’s how I’d aim for a million.

A new lifetime habit

The first step would be to start saving. Stocks are volatile investments. Accordingly, I need spare cash I’m happy to set aside for the long term. That way, I can endure inevitable falls in the value of my investments over the coming years without needing to sell my shares.

So, with zero savings in the bank, I’d begin by building an emergency fund. An appropriate place for this would be an instant access cash savings account, so I’m not caught short if the boiler breaks or I need unexpected dental care.

Once that’s in order, I can start investing in shares. That means it’s time to open a Stocks and Shares ISA and take advantage of the generous £20k allowance I have each tax year.

ISA investing

A Stocks and Shares ISA is an investment wrapper in which I can buy funds, individual equities, bonds, commodities, or other financial products, depending on my choice of provider.

The key benefit of investing in an ISA is the tax-free treatment awarded to my holdings. So, no capital gains tax, dividend tax, or income tax in perpetuity as the rules stand!

Of course, there’s a risk the UK’s tax regime could change in the future. But, at present, it’s an excellent way to shelter my potential gains from HMRC’s clutches.

A seven-figure portfolio

To target a million-pound portfolio, I’d invest in a diversified mix of growth and dividend shares. Examples of stocks I own include FTSE 100 pharma titan AstraZeneca, US chipmaker Nvidia, and Warren Buffett’s holding company Berkshire Hathaway.

All of these companies face risks and the trajectory of their share prices won’t move in straight lines. During bear markets and periods of stock market turbulence, I wouldn’t be surprised to see the value of my portfolio fall. That’s par for the course when assuming volatility — and this reinforces the need for a non-volatile emergency fund.

So, how long would it take me to hit the magic £1m number?

Assuming I secured an 8% compound annual growth rate on my investments and I managed to invest £500 a month, here’s what my journey could look like.

YearPortfolio value

There you have it. I’d be a stock market millionaire in time for my 65th birthday!

In reality, the maths is unlikely to be this simple. If I experienced extended periods of poor returns, my journey towards a seven-figure sum would take longer. Or I might have to raise my contributions to hit my target.

Nonetheless, with good financial habits and some savvy stock picks, aiming for a million isn’t as impossible as it might seem at 30 with no savings to my name.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Carman has positions in AstraZeneca Plc, Nvidia, and Berkshire Hathaway. The Motley Fool UK has recommended Nvidia. 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.

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