Using a Stocks and Shares ISA is one of the best ways to build wealth in the stock market entirely tax-free. And with thousands of UK and US stocks to choose from, investors are spoilt for choice when aiming to build diversified market-beating portfolios.
But it’s no secret that building wealth in the stock market requires some upfront capital. So, just how much money does it take to reach millionaire status in an ISA? Let’s find out.
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.
Crunching the numbers
Reaching £1,000,000 in an ISA is an ambitious goal. But as almost 5,000 investors have already proved, it’s not an impossible one. And it all boils down to consistency.
The FTSE 100 has historically generated an average annual return of 8% per year. And by building a portfolio that replicates this return over the long run, investing just £500 a month is enough to reach millionaire territory in approximately 34 years.
At this rate, a total of £204,000 would have been invested, with £849,293 of pure investment profit.
Building wealth faster
Waiting just over three decades is obviously quite a long time, especially for investors seeking to retire a little earlier. And since there’s no guarantee the FTSE 100 will continue to generate an 8% return moving forward, investors relying on index funds might have to wait even longer.
Fortunately, this is where stock picking can be a game-changer. By investing exclusively in the best and brightest businesses, the journey to ISA millionaire status can be drastically accelerated. Of course, this strategy also comes with increased risk. After all, investing in the wrong stocks could actually destroy wealth instead of building it.
A perfect example of successful stock picking in action over the last 20 years is Halma (LSE:HLMA). Including dividends, the safety and life protection equipment business has generated a total return of 3,325%.
That works out to a 19.3% annualised return – enough to transform a £500 monthly investment into £1m in just under 19 years. In other words, a 40-year-old with next to no savings in 2005 who consistently invested in Halma shares can now enjoy retirement with a tax-free £1,000,000 pension pot.
Still worth considering?
Halma’s enormous long-term success stems from a combination of consistent organic growth, steady margin expansion, and prudent capital allocation by its leadership. In 2025, the business continues to exhibit these winning traits, in my opinion.
While organic growth has slowed, profits continue to reach record highs, with dividends enjoying 46 years of consecutive payout hikes. It seems that, regardless of economic conditions, demand for Halma’s products and services remains strong, translating into impressive free cash flow generation that continues to compound.
This certainly helps explain the bullish outlook from several institutional analysts. However, even the optimists have identified some credible risks for investors to keep an eye on.
Macroeconomic threats such as rising tariffs and geopolitical tensions could adversely impact the business in the short term. And those threats are only being compounded by rivals seeking to encroach on the group’s market share.
Pairing this with a lofty valuation opens the door to volatility if Halma starts to stumble. But should that happen, it could create a buying opportunity for long-term ISA investors. That’s why I think investors may want to investigate Halma shares further today.
