Can we make a million in a Stocks and Shares ISA? Well, before the pandemic, there were around 2,000 ISA millionaires in the UK.
That number took a bit of a hit when the value of shares plunged in 2020. But now we’re past the crash, where do you think the millionaire count might be?
I was amazed to find that there are now more than 4,000 of them. And it looks like they pretty much all did it with a Stocks and Shares ISA.
Top secret number
That immediately tells me one of the key secrets of stock market millionaires.
When everyone is selling and shares are crashing… buy.
I guess it should be obvious. After all, billionaire investor Warren Buffett urges us to buy when others are fearful.
But it can really hurt when we see the ISA we’ve built up over years with our hard-earned money fall. And wanting to stem the pain can be natural.
Maybe that pain is easier to bear for those whose ISAs are up around the million pound mark? But, whatever our wealth, selling in 2020 looks like it would have been a mistake.
ISA allowance
Another key secret of ISA millionaires is to use up as much of the annual allowance as possible. But there’s no surprise there.
The £20,000 limit is a lot of money to most of us. But it still blows my mind a bit that it’s enough to get investors up into the millionaire bracket. And early ISA investors could invest a lot less.
In fact, never mind a million. The top 50 ISA investors have average pots of more than £8m. And the average millionaire ISA account holds close to £1.4m.
Most of these successful investors started in the days of PEPs, so they’ve been going for a long time. And that’s the last big secret that’s not so secret.
Some secret!
So is that it then? Just invest as much as possible in a Stocks and Shares ISA, and leave it there for a long time?
Well, yes, that’s what it looks like to me. And it isn’t a secret at all, is it?
Still, I am surprised to see the number of ISA millionaires climb so quickly in the past few years. It looks like the long-term stock market thing could be even better than this old investor thought.
One last thing
But, there’s one final thought.
Stock market investing can be risky, especially in the short term. We only need to look back at 2019/20. That year, the average Stocks and Shares ISA lost 13.3%. Ouch!
Stocks and Shares ISA returns are not guaranteed. But one thing that’s almost guaranteed is that some years they’ll lose money.
So to be successful ISA investors, we need to be able to cope with bad years.
We might not have a million as a buffer to help. But I do think it’s good to adopt the long-term, cool and calm mindset of these ISA millionaires.
