Here’s how I’d use a Stocks and Shares ISA to aim for a million

This writer thinks taking the right long-term approach to investing could help him turn his Stocks and Shares ISA into a goldmine. Here’s how.

| More on:

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.

Aerial shot showing an aircraft shadow flying over an idyllic beach

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The idea of becoming a stock market millionaire has a certain appeal. I also think it is possible, even from a standing start and with no savings.

But turning an ambitious goal like that into reality takes more than just positive thinking and optimism. It needs a realistic plan of action. I reckon I could use a Stocks and Shares ISA to aim for a million.

Here’s how.

Should you invest £1,000 in Aviva right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva made the list?

See the 6 stocks

Setting the right timeframe

To begin, note that this is a long-term goal. I would not expect to start with nothing and become a millionaire in a short time. Instead my timeline here is in decades.

What is the benefit of such a long-term approach to investing?

As I see it, it means I can do the work upfront of putting aside money and finding shares to buy. Then, if I choose the right shares, I can let time do the heavy lifting of turning my Stocks and Shares ISA into a portfolio of far higher value than the money I put in.

Investing with a long-term vision

Speaking of putting money in, how much would I invest? Everyone’s financial circumstances are different and any smart investment approach needs to reflect that. In this example, I imagine investing £850 each month.

To do that, I would set up a Stocks and Shares ISA – there are lots to choose from – then start putting my money into it regularly.

Ongoing target as I aim for a million

Talking about getting my ISA value up to seven figures is ambitious. Breaking that down into a smaller series of targets could help me focus.

To achieve that goal, what would I need to do? If I put in £850 each month and can grow my Stocks and Shares ISA at a compounded annual rate of 8%, it ought to be worth a million pounds after 28 years. As I said, this is a long-term plan. Becoming a millionaire takes time and effort.

Looking for shares to buy

So what sort of shares might let me achieve that average annual compound annual growth rate of 8%? I would spread my Stocks and Shares ISA over a few different choices, so that disappointing performance by one would have a limited effect on my overall performance.

The 8% could come from either growth, dividends (that I would reinvest) – or both. An example of a share I own that I hope could give me both is Reckitt (LSE: RKT).

It sells consumer goods, a market I expect to benefit from long-term customer demand. Thanks to its collection of premium brands such as Vanish, it is able to charge a higher price for its products than unbranded competitors. That is good for profits.

Created with Highcharts 11.4.3Reckitt Benckiser Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The company’s shares have performed weakly in recent years. In part that is due to a disastrous acquisition of a nutrition business and I see a risk that it will continue to dog Reckitt’s overall performance even though the company has slimmed it down considerably.

Still, I saw the share price weakness as a buying opportunity and hopefully will receive regular dividends while I own the shares — and aim for a million!

Should you invest £1,000 in Aviva right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva made the list?

See the 6 stocks

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.

C Ruane has positions in Reckitt Benckiser Group Plc. The Motley Fool UK has recommended Reckitt Benckiser Group Plc. 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »