Tax-free investing: tips to become an ISA millionaire

There are more than 4,000 investors who have become ISA millionaires. Fancy joining the club? Here's what you need to do.

ISAs are not just cracking vehicles for shielding your funds from the taxman ‒ they could turn you into a millionaire.

In fact, there are more than 4,000 investors who can legitimately call themselves ISA millionaires.

Remarkably, figures from HMRC, revealed following a freedom of information (FOI) request by Openwork Partnership in 2024, found that the 50 most successful ISA investors had amassed pots worth a staggering £8.5 million on average.

The average pot size among all ISA millionaires was a none-too-shabby £1.4 million.

Fancy joining the club? Let's take a look at what you need to do. 

1. Invest early in the tax year

The early bird catches the worm, so they say.  Indeed, according to the latest study by investment provider Hargreaves Lansdown, nearly a third (30%) of their ISA millionaires opened or topped up their ISA as soon as they could - in the first two weeks of the 2025/26 tax year.

And, of those that did so in the 2024/25 tax year, a third (34%) also topped theirs up in the first two weeks of the financial year.

In fact, only 2% of ISA millionaires were last-minute crammers - investing in the last week of the 2024/25 tax year.

“ISA millionaires are a keen bunch, with 30% of HL’s ISA millionaires topping up or opening an ISA in the first two weeks of the 2025/26 tax year," said Victoria Hasler, head of fund research at Hargreaves Lansdown.

"These sorts of disciplined investing habits will have stood them in good stead and perhaps even helped them to become ISA millionaires, making the most of their tax-free allowances over time..."

"ISA millionaires know the importance of compounding. They have heard and understood that old investing adage that it’s not timing the market, but time in the market that matters.

"When they got their new ISA allowance at the start of the year, many took advantage of it straight away to get investing in a tax-efficient manner."

2. Want to be an ISA millionaire? Get active

According to Hargreaves Lansdown, ISA millionaires are more likely to top up or buy active funds than ISA holders who have yet to become millionaires.

"Interestingly, active funds were more common investments for HL’s ISA millionaires than they are with the general client base," said Hasler. "Six of the top ten most popular funds bought by ISA millionaires in the first two weeks of the tax year are run by active managers.

"Four of these were global funds, but two were UK funds (including the most popular fund). Maybe ISA millionaires can now see value in the UK market. Four of the funds were income-focused, perhaps reflecting a lower risk appetite during these volatile times."

Besides funds, ISA millionaires favoured UK equities, with many FTSE 100 stocks in their top 10 list of stocks, said Hargreaves Lansdown, such as pharmaceutical giant GSK and BP. 

These investors tend to prefer stocks paying solid dividends, demonstrating an interest in income generation. 

"A UK government bond (gilt) also made it onto the list at number seven," noted Hasler.  "Again, perhaps a sign of the times that investors are looking to less risky investments.”

3. How can you become an ISA millionaire?

Simply knowing the names of these top-performing funds and trusts will not necessarily help you follow in the footsteps of ISA millionaires.

Instead, you need to take lessons from the savers who have managed to build such big balances, and see which you can apply to your own habits to join the ISA millionaire club.

It’s important to emphasise that simply setting aside the maximum each year is not going to be sufficient.

As Laura Suter, head of personal finance at AJ Bell, pointed out in 2023, if you put the full allowance in an ISA each year between 1999 and 2022 and earned a 5% return, you’d be sitting on around £441,000, some way off hitting seven figures.

Instead, you need patience ‒ and a little bit of luck along the way.

So with the ISA deadline on the horizon ‒ remember you have until midnight on 5 April 2026 to use this year’s £20,000 ISA allowance ‒ here’s our guide to the steps you can take to (potentially) join the ranks of the ISA millionaires.

4. Make the most of your allowances

Allowances have rocketed in recent years, with the annual ISA allowance now standing at £20,000, up from £7,000 a decade ago.

But no one knows what the future holds, and allowances could fall. Indeed, Chancellor Rachel Reeves is currently looking at the ISA allowance and there are rumours it could be cut to just £4,000 a year. 

Read more: How to transfer an ISA

5. Reinvest your dividends

It can be tempting to take any dividends your ISA earns as an income but reinvesting them into your portfolio will have a significant effect on your overall returns as you are compounding the growth.

6. Take some risks

The stock market can be a scary place, but don’t stunt your capital growth by being too risk-averse.

If you are putting money aside for the long-term – think 10 years or more – then it’s generally accepted that your money has a better chance of growing substantially if it is invested in the stock markets rather than in a Cash ISA.

7. Travel the world

Diversification is the key to building a successful investment portfolio. That doesn’t just mean investing in different asset classes it also means exposing your portfolio to numerous markets around the world.

Emerging markets may be riskier than investments in more developed countries, but they are also economies with more potential for faster growth. 

Don't assume that investing in more mature markets are without risks - consider the turbulence of the US stock markets this year following President Trump's tariffs. 

8. Don’t go mad

While a little bit of risk may help your portfolio grow, don’t stick all your money in high-risk investments.

You need to be comfortable with the risk, and the potential loss it could result in.

Make sure your whole portfolio reflects your overall attitude to risk.

That could mean spreading your investments across a variety of risk levels.

Bear in mind, however, that you could risk losing your capital (your existing investment). Any share or fund can fall in value as well as rise. 

Even seemingly well-funded, blue-chip companies can go bust. 

9. Consider using an expert

While there are some ISA millionaires who have built their fortunes through investing in individual stocks themselves, most people prefer to invest in funds and, in particular, actively managed ones. 

“While tracker funds are an excellent way to get started with the stock market, many of these more experienced investors, with much larger portfolios, have selected a recommended manager who runs a relatively concentrated portfolio,” according to Hargreaves Lansdown.

“That way, they have the potential to amplify growth, without necessarily having to become an expert in those stocks themselves.”

However, it is important to keep an eye on the fund management fees that can seriously eat into your profits.

Many passive funds charge fees of just 0.1% or less, whereas actively managed funds may charge 1% or more a year, which could mean the difference between making money from your investments or not. 

Is your actively managed fund essentially tracking an index, meaning the manager has to buy or sell certain stocks if they enter or fall out of the FTSE 100, for example? 

A passive fund could provide better value if it does the same, but the fees are less. 

10. Don’t chop and change too much

Investing is a long-term process and you need to take a long view.

You should certainly keep an eye on your portfolio to make sure its performance is meeting your expectations but don’t constantly trade investments.

Buying and selling constantly will dent your overall growth due to higher transaction costs and you could also miss out on the long-term growth story of a fund or share.

11. Ride out the bad times

The stock market can be a turbulent place, as we've seen ample evidence of this year.

However, building a large, successful portfolio is all about holding your nerve when the markets are tough.

Don’t try to time the market – the chances are you’ll get it wrong.

The major investment mistake too many people are making

13. Get the family on board

You might have your own ISAs in hand, but what about the rest of your family?

Try to get your spouse or partner to make the most of their ISA allowance too and don’t forget that you can tuck money into Junior ISAs for your children.