The £2 million ISA is becoming the new £1 million ISA with 270 individuals holding more than £2 million in their ISA accounts last year*, according to new data from Bowmore Wealth Group.
John Clamp, Chartered Financial Planner at Bowmore, says that reaching a £2 million ISA pot is no longer an unrealistic ambition for investors and could be achieved tax-free in as little as 31 years with consistent investing.
By investing the full annual ISA allowance of £20,000 (equivalent to £1,666 a month) and achieving an average annual return of 7%, investors could build a £2 million tax-free portfolio over three decades.
John Clamp says the findings highlight the growing importance of ISAs as a long-term wealth-building tool, particularly as more savers look to maximise tax-free returns.
However, Bowmore warns that many investors risk falling short of this goal by holding too much in cash for too long or by dipping into their savings prematurely.
While cash ISAs may appear to offer security, their lower returns can significantly slow wealth accumulation over time – often shrinking in real terms. In contrast, investing in equities can dramatically accelerate long-term growth, particularly when returns are compounded.
Bowmore says maintaining a disciplined, long-term approach is critical, with investors needing to consistently use their ISA allowance and avoid withdrawing funds unnecessarily if they want to maximise returns.
John Clamp says: “ISA millionaires are becoming increasingly common – but the next milestone is already within reach for many investors who take a long-term view.”
“The real difference comes down to behaviour. Consistently investing the full allowance and allowing returns to compound over time can turn what seems like an ambitious target into something very achievable.”
“Too many savers still rely heavily on cash or interrupt their investment journey by dipping into their ISA. That can significantly delay reaching major financial milestones.”
“If investors want to maximise the full potential of their ISA, they need to stay invested, think long term and make full use of the tax-free benefits available while they can.”
*Data obtained from a Freedom of Information request to HMRC
