How to become a NISA Millionaire starting now

Investing your Isa in equities could make you a millionaire, figures from wealth manager Brewin Dolphin has shown. The wealth manager has revealed that it already has 15 ‘Isa millionaire’ clients, whose Isa pots have broken the magic million pound barrier. A further 40 have assets in ISAs of well over £750,000.

These investors have two things in common – they invested directly in equities and took some risks, but Brewin has calculated that even ISA savers who invest the full ISA allowance conservatively every year, could now reach the million pound mark in just 27 years.

Today the ISA allowance increases to £15,000 and by our calculations (in table below) you will be able to reach the £1million mark three years faster than it would have taken before this year’s Budget.

With conservative assumptions on growth and income (5% combined) and inflation (2.5%), by 2040 you would see a total fund of £1,071,394 representing a gain of £491,194 on a total investment of £580,200. The total tax saving over this period would be an impressive £318,847 and a £1 million+ tax free fund for life. (See details below)

Guy Foster, Head of Portfolio Strategy said, “Saving in a tax efficient wrapper remains one of the most compelling ways of realising your long term financial ambitions. During its life, the WMA Balanced Total Return index has returned compound annual growth of 8.5% - despite the so-called lost decade for equities after 2000. Even now, with the FTSE paying seven times as much income as bank deposits, we have assumed a more conservative 5% return and still an investor using their full ISA allowance each year could be a millionaire in 27 years with no tax to pay on their gains. The importance of compounding, and the benefits of tax efficient saving, can deliver life-changing wealth to those who seize the opportunity.”

Tim Walker, head of Brewin Dolphin Exeter said, “ISAs and Peps have been such a valuable savings medium over the past 27 years and we advise clients not to, whenever possible, miss a chance to use their allowance, either alone or as a tax-free zone within their portfolio. The total investable amount in ISAs and their predecessors PEPs over the last 27 years now stands at £200,560. And now with the increased allowance anyone could be an NISA millionaire within the next 27 years – starting form today.”

The total value of all Brewin Dolphin ISA portfolios is over £5 billion.

Year	Annual Allowance Inflation Adjusted	Annual WMA Balanced Performance	Rolling ISA Pot With Long Run Performance Assumption of 5%	CGT Annual Allowance Inflation Adjusted
01/07/2014	£15,000	5.00	£15,000	£11,000
06/04/2015	£15,375	5.00	£31,125	£11,100
06/04/2016	£15,759	5.00	£48,441	£11,200
06/04/2017	£16,153	5.00	£67,016	£11,480
06/04/2018	£16,557	5.00	£86,924	£11,767
06/04/2019	£16,971	5.00	£108,241	£12,061
06/04/2020	£17,395	5.00	£131,049	£12,363
06/04/2021	£17,830	5.00	£155,432	£12,672
06/04/2022	£18,276	5.00	£181,479	£12,989
06/04/2023	£18,733	5.00	£209,286	£13,313
06/04/2024	£19,201	5.00	£238,952	£13,646
06/04/2025	£19,681	5.00	£270,581	£13,987
06/04/2026	£20,173	5.00	£304,283	£14,337
06/04/2027	£20,678	5.00	£340,175	£14,695
06/04/2028	£21,195	5.00	£378,378	£15,063
06/04/2029	£21,724	5.00	£419,021	£15,439
06/04/2030	£22,268	5.00	£462,240	£15,825
06/04/2031	£22,824	5.00	£508,176	£16,221
06/04/2032	£23,395	5.00	£556,980	£16,626
06/04/2033	£23,980	5.00	£608,809	£17,042
06/04/2034	£24,579	5.00	£663,828	£17,468
06/04/2035	£25,194	5.00	£722,214	£17,905
06/04/2036	£25,824	5.00	£784,148	£18,353
06/04/2037	£26,469	5.00	£849,824	£18,811
06/04/2038	£27,131	5.00	£919,447	£19,282
06/04/2039	£27,809	5.00	£993,228	£19,764
06/04/2040	£28,504	5.00	£1,071,394	£20,258
Source: Brewin Dolphin
Inflation Assumption				2.5%
Total Invested				£580,200
Total Gain				£491,194
Total Capital Gain assuming 60% of growth is gain				£294,716
Gains Tax Saving over 27 yrs (assuming complete disposal at period end)				£274,459
Total Dividend Income assuming 40% of growth is income				£196,478
Dividend Income Tax Saving (for higher rate tax payers)				£44,207
Total Tax Saving				£318,666
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