With all income and capital gains being earned tax-free, a Stocks and Shares ISA has the potential to grow more quickly than other types of investment products. But is it really possible to build a £1m+ portfolio of shares? I think so. Here’s how it could be done.
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
There are three factors that will influence the size of an ISA – the amount invested, the growth rate, and the length of time over which it’s held.
Of these, the annual growth rate is the one that’s most outside the control of the investor. However, as a benchmark, from 2016-2025, the FTSE 100 returned (with dividends reinvested) an average annual rate of 9.5%. According to IG, from its launch in 1984 to 2019, the index grew by 7.8%. The figure drops to 5.8% if dividends are excluded.
Obviously, it’s better to invest for as long as possible. Little and often is a good philosophy.
When asked whether now is a good time to start, the answer is always likely to be yes. By taking a long-term view, timing the market becomes largely irrelevant.
So?
With this in mind, the table below shows how long it would take for a monthly investment of £1,667 to grow to £1m, depending on the growth rate achieved. The figure I’ve chose isn’t random. It’s the monthly equivalent of the £20,000 annual limit that can be put into a Stocks and Shares ISA.
Clearly, this is a lot of money. But nothing in life is free. However, to put this in context, the various scenarios show that the total amount invested could double within 21-26 years. What’s not to like about that?
| Annual growth rate | Period (years) | ISA value (£) |
|---|---|---|
| 5% | 26 | 1,049,959 |
| 6% | 24 | 1,049,257 |
| 7% | 22 | 1,017,096 |
| 8% | 21 | 1,051,854 |
Taking 25 years as a reasonable period over which to invest, £1,472 a month would grow to £1m, assuming a 6% annual return. At 8%, this figure drops to £1,094.
Not everyone’s going to be in a position to build a £1m+ ISA but these figures show that with patience and discipline it’s possible.
A slow burner
One stock that’s delivered a 6% increase in its share price over the past 10 years is National Grid (LSE:NG.), the energy group. And with a current (10 April) yield of 3.5%, it could be one for long-term investors – those looking to build a £1m+ portfolio — to consider.
Admittedly, it’s likely to be a slow and steady performer. But reliable and consistent – if unspectacular — returns are a feature of operating in a regulated industry. For example, the group’s allowed to earn just over 6% a year from managing the high-voltage power network in England and Wales.
It’s targeting an annual 6%-8% increase in earnings per share up until 2029. It also aims to grow its dividend in line with inflation.
However, if interest rates go up – or remain higher for longer – the group’s earnings could come under pressure. At 30 September 2025, it had total borrowings of £45.9bn. It surprised investors in 2024 with a £7bn rights issue.
Despite this, I think it’s the sort of stock that could be put into an ISA and forgotten about. The majority of its earnings come from markets where it doesn’t have to worry about winning new customers. This gives it more visibility — and greater certainty — over its future earnings than other businesses of a similar size.
