The Motley Fool

4 essential habits for becoming an ISA millionaire

Image source: Getty Images

The ‘secret’ to becoming an ISA millionaire isn’t a secret: you just need to buy great stocks at reasonable prices and hold for decades. The only caveat is that it’s easy to sabotage your own progress. Here’s how to stop that from happening.

1. Focus on the process

The first habit to cultivate is actually to stop obsessing over the value of your portfolio. As James Clear states in his book Atomic Habits: “You do not rise to the level of your goals, you fall to the level of your systems“. ISA millionaires always shoot for becoming better investors.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

People will vary on the extent that they want to learn about the stock market. Nevertheless, we all should know (and frequently review) our financial goals, time horizon and risk tolerance at the very least. Stock-pickers absolutely must keep up to date with their companies too.

By focusing more on the process, you’re also less likely to become demotivated in the early years when the benefits of compounding are hard to appreciate.

2. Millionaire spending hacks 

What image springs to mind when you imagine an ISA millionaire? Fast car? Big house? In truth, a lot of eventual millionaires have no interest in showing off their wealth. They get used to living below their means. Just look at Warren Buffett.

This does not mean adopting a monk-life existence. It means keeping your spending under control.

If you’re tempted to buy something online, leave it a week before buying it. This way, you make fewer impulsive purchases. Another option is to select something you habitually spend money on, such as your morning coffee, and move that cash into your ISA at the time you’d usually buy the former. You may miss the caffeine hit initially, but the reward of seeing your savings increase immediately should compensate and make it more likely you’ll repeat the behaviour.

3. Automate to your ISA!

Investing is one of the few endeavours where it’s possible to become wealthy without actually doing much. To stick with it, however, you need to make it easy. This involves automating what you can.

Set up an instruction with your ISA provider to transfer a fixed amount of money from your current account every month. Make this coincide with payday and you won’t be tempted to splurge the money on something else. Think of it as paying a bill, albeit one that will eventually get refunded (and then some!) further down the line. 

You can also set an instruction to automatically invest the same amount in a group of shares or funds every month. Pound-cost averaging is one of the greatest tools available to private investors.

4. Be tough (on yourself)

To ensure your good deeds bear fruit, you also need to be tough in eradicating your worst tendencies. These can include constantly checking your portfolio’s value and/or selling great stocks because you’re scared or bored.

Make doing these things as hard as possible. Options include watching/reading less panic-inducing news (removing the ‘cue’ to do something) or blocking your laptop from accessing your broker’s website. In a fresh twist on the ‘swear jar’ idea, you could also have an agreement to do something you hate if you lapse. 

Remember, the biggest threat to becoming an ISA millionaire is not the occasional, inevitable market crash — it’s you.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.