How YOU Could Become An ISA Millionaire!

There are many ways to become a millionaire. You could win the Lottery. Hit thePremium Bonds jackpot. Rob a bank (or become a banker). Design a must-have app. Become a globally-famouscelebrity. The drawbackis that only one a million will get rich that way. But theres a way forordinary people with average luck to become millionaires, provided theyhave a few thousand pounds to spare each year, and a littlepatience.

Who wants to be a millionaire?

It really is possible to become a millionaire frominvesting in stocks and shares, byusing your tax-efficient individual savings account (ISA) allowance to the max. Hundreds of investors have already become done thissince the savings scheme was launched in 1999, and you could join them.

Last year, Barclays stockbrokers revealed that 67 of its clients were ISA millionaires, and there must be plenty more onother investment platforms. None of thembecame an ISA millionaire overnight because investing in stocks and shares isnta get-rich-quick enterprise. Quite the reverse, its a great way to get rich slowly. The sticking point is that you need to invest a tidy sum each year.

Thanks a million

You couldhit that financial milestone a lot faster now thatChancellor George Osborne has expanded the ISA allowance.This tax year you can invest up to 15,240 in a stocks and shares ISA, and pay no income tax or capital gains tax on your returns for the rest of your life. From 6 April 2017, you will be able to invest a whopping 20,000, five times Chancellor Gordon Browns original ISA limit of 4,000.

New research from Fidelity International shows that investors who take full advantage of their allowancecan become an ISA millionaire in just 24 years and one month. These figures assume you invest your maximum ISA allowance from this year, and continue to invest as the allowance increases by an assumed 2% every year.It also assumesyour savings grow by 5% year after year,aftercharges. Of course, they could grow faster. Or slower.

Dash from cash

To hit that million, you mustinvest in a stocks and shares ISA, rather than safe but dull cash, as the potential rewardsare far higher. If you had invested 15,000in the FTSE All Share index on29 February 1996 you would have 51,866 today. But if you had put it in the average UK savings account you would holda paltry 20,345, Fidelity says.The difference is a mighty 31,521.

These figures also assume you reinvest all your dividends for future growth, which is the key to long-term investment success. Withoutincome reinvested, the FTSE 100 is still11% below the 6,930 it hiton 31 December 1999, but with income reinvested its more than70% higher.

Not every ISA investor will make that million. Most of us simply cantaffordto pay 20,000 a year into a stocks and shares ISA(me included). But it pays to aim high, because even if you fall short you should still wind up far richer than if younever tried at all.