The latest figures show there are over 5,000 ISA millionaires, with the vast majority of them invested in stocks and shares. That’s up more than tenfold from just 450 in 2016.
Therefore, reaching a seven-figure portfolio isn’t just a pipe dream. It’s doable. But how long could it take someone starting from scratch today?
AI input
I asked ChatGPT, which gave me three scenarios. First, it assumed someone invested £500 each month. In this case, it would take just over 30 years at a 9% rate of return. But this would fall to around 26 years with a 12% return.
The AI assistant called this the “slow-burn route“, but one that can eventually pay off.
Second, it gave the figures for £1,000 invested each month. These were 22 years (9%) and 19 years (12%).
For someone who can afford to max out the £20,000 ISA limit each year, it would take roughly 18 years to reach £1m with a 9% return. And just over 15 years at 12%.
Assuming a 9% yearly return on £12,000 per year then, this gives us a period of around 22 years. This isn’t guaranteed, of course, as investors may not reach that 9% return and if they don’t, that seriously hampers their chances of reaching millionaire status. But I still think it’s a realistic figure to aim for when starting from scratch.
However, I wouldn’t rely on AI chatbots for stock research. The data can often be outdated.
Rule of 72
For investors starting with a lump sum, remember the Rule of 72. This simple formula estimates how long it takes to double a portfolio by dividing 72 by the annual return rate.
For example, it would take 7.2 years to double with a 10% return. Or just 4.8 years at 15% (admittedly a very high rate).
Cheap tech giant
Some of the most popular stocks among ISA investors are the Magnificent Seven tech firms. We know this because investing platforms regularly release data.
In the past week, four of the 10 most bought shares on AJ Bell were from the this group. These were Nvidia, Meta Platforms (NASDAQ:META), Amazon, and Tesla.
Of these, I think social media giant Meta looks quite interesting right now. The share price is down 20% since August, as investors worry about the massive investments the firm is making to build out AI infrastructure.
To be clear, this does add risk because it’s for anticipated demand for its own future AI products (and this might not materialise). Moreover, it’s been using debt to help fund these capital expenditures.
However, the valuation now looks attractive. The forward price-to-earnings ratio is 21.3, falling to just 19 by 2027. That makes it the cheapest Magnificent Seven stock right now.
Long term, I think Meta has many ways to keep growing. There’s the ongoing monetisation of WhatsApp (still early days), more AI optimisation of targeted ads, monetisation of the massive user base in India, and growing sales of AI glasses.
Of course, as a $1.5trn tech giant already, Meta stock isn’t going to make millionaires from a few grand. But I reckon it still has the potential to contribute solid returns inside an ISA from today’s price.
As such, this 20% dip-buying opportunity could be one to look into more closely.
