"The secrets of the ISA millionaires"

[mc2fool]

The seemingly annual article about ISA millionaires, and what their most common holdings are. It strikes me that many of the most common holdings -- like Lloyds, Shell, Vodafone, Aviva, Glaxo, etc -- reflect a more conservative outlook, which maybe isn't surprising at an age where keeping hold of it is perhaps more important than making more of it.

"The three biggest investment platforms have 1,365 ISA millionaire clients between them, with Interactive Investor home to 731, Hargreaves Lansdown reporting 579 and AJ Bell servicing 55.

Their average age is 71 on both Hargreaves and Interactive, and 69 on AJ Bell, underlining the fact that most will have taken decades to get there."

https://citywire.co.uk/funds-insider/news/the-secrets-of-the-isa-millionaires/a1470332

[Lootman]

Yeah, I have invested the max into PEPs and ISAs since they started in 1987 or so (except for single company PEPs, which I also had but sold to buy a property in the 1990s).

I am at 800K so clearly not in their league. I was never as boring or suicidal as to buy UK banks, but I had a six figure holding in Personal Assets IT for a good number of years, which did what it said on the tin, but sadly that was never going to shoot the lights out.

Funnily enough at this point, after a lifetime of deeming maximising ISAs as an article of faith, I am thinking about starting to draw it down. I think it may become a political target as the great unwashed might vote for someone who resents people like me making 50K or 100K a year tax free. And they are useless for IHT mitigation unless you want to dump the lot in qualifying AIM shares.

Still thinking about it.

[yorkshirelad1]

I think it may become a political target as the great unwashed might vote for someone who resents people like me making 50K or 100K a year tax free

Anything is possible, but a lot of people hold cash ISAs so that might be quite unpopular, and it would be a disincentive to save (I used to think saving was considered A Good Thing but the powers that be probably want people to get out there and spend). A maximum holding limit for ISAs has been mooted before. I used to have the notion that retrospective tax changes weren't really a good idea, but I wouldn't be surpirsed by any u-turn that any politician does these days to keep their popularity boosted.

And they are useless for IHT mitigation unless you want to dump the lot in qualifying AIM shares..

I would concur. A couple of provisos.

• If one is married (and I am not, and I resent the tax rules that people who are not or have chosen not marry cannot benefit from the same tax reliefs that married couples get) one can pass an ISA to a spouse (but it could get caught on the second death, unless the widow/er remarried...). ISA are subject to IHT, but the ISA wrapper can be passed on (which may be valuable to some)
• I've always thought that investing in AIM shares for IHT relief (unless you invest in one of the AIM funds that is managed for IHT relief purpsoes) is not for long term IHT planning: the BPR/AIM/IHT rules and the BPR status of any holding could change overnight

[yorkshirelad1]

The seemingly annual article about ISA millionaires, and what their most common holdings are. It strikes me that many of the most common holdings -- like Lloyds, Shell, Vodafone, Aviva, Glaxo, etc -- reflect a more conservative outlook, which maybe isn't surprising at an age where keeping hold of it is perhaps more important than making more of it.

"The three biggest investment platforms have 1,365 ISA millionaire clients between them, with Interactive Investor home to 731, Hargreaves Lansdown reporting 579 and AJ Bell servicing 55.

Their average age is 71 on both Hargreaves and Interactive, and 69 on AJ Bell, underlining the fact that most will have taken decades to get there."

https://citywire.co.uk/funds-insider/news/the-secrets-of-the-isa-millionaires/a1470332

Article requires registration, so haven't read the full article (unless someone has a url that gets round the login requirement)

HL have a similar article:
https://www.hl.co.uk/news/articles/how-3-clients-used-isas-to-become-millionaires

TBH, I rather resent HL touting me (Yes, I have an ISA with HL and it's above £1m) and 578 other customers to punt their services/marketing. OK, it's anonymised. But then it's not costing me anything to have my ISA at HL (am still paying the annual fees out of a loyalty bonus for switching to them) so I suppose that's fair game As mcfool says, these "ISA millionaire" articles are a regular and now slightly not-as-novel-as-they-were occurence. Perhaps it would be interesting to see the next level up (whatever/whenever that may be: perhaps £10m)?

There's a thread over on MSE with a discussion of citywire article which talks about the maximum sums that could have been invested.

TBH (2), if one has been in the fortunate position to have invested steadily and annually (for the permitted limit) in PEPs (started 1987), ISAs, TOISAs, been lucky enough to get some of the demutualisation shares (e.g. Norwich Union) which could be transfered into a PEP (tax free as deemed received at zero cost), reinvested the income, one might ask a question as to why the total would not be above £1m by now....

[mc2fool]

Article requires registration, so haven't read the full article

Registration is free and they don't spam you. Citywire is often referred to on TLF so it's worth getting access.

[Dod101]

I do not think there is anything particularly exceptional about being an ISA millionaire if you have invested in PEPs since 1987 and subscribed the maximum each year and especially if you have not drawn any dividends. I am not far off that and was only able to start in 1991 and have drawn dividends all the time. Had I not done that I am pretty sure I would have been at £1 million by now. I have even occasionally drawn some capital.

I think it is a bit of a non story by now.

Dod

[doug2500]

I strongly suspect that there are many more out there. These articles will miss all the investors with more than one ISA. And on the whole I would expect the more your assets the more likely you are to have shared them about.

While I fall well short of the target I have multiple ISA's so won't show up on these lists ever, even if I'm spectacularly succesful!

[CryptoPlankton]

The seemingly annual article about ISA millionaires, and what their most common holdings are. It strikes me that many of the most common holdings -- like Lloyds, Shell, Vodafone, Aviva, Glaxo, etc -- reflect a more conservative outlook, which maybe isn't surprising at an age where keeping hold of it is perhaps more important than making more of it

Vindication for HYP!
(Doug beat me to my main point...)

[mc2fool]

I strongly suspect that there are many more out there. These articles will miss all the investors with more than one ISA. And on the whole I would expect the more your assets the more likely you are to have shared them about.

Yep, but at the same time I wonder how many of the ones counted use more than one of the brokers listed and so reduce the headline number presented, which actually counts ISAs in each platform with a million+ in them, not the number of millionaires.

[scrumpyjack]

I strongly suspect that there are many more out there. These articles will miss all the investors with more than one ISA. And on the whole I would expect the more your assets the more likely you are to have shared them about.

While I fall well short of the target I have multiple ISA's so won't show up on these lists ever, even if I'm spectacularly succesful!

Yes, I'm amazed HL only have 579. I'm there and my wife very nearly is, and that is after some disasters too!

For HMG it is a good ploy to get us oldies to build up IHT'able assets and then clobber our estates. It's worked with us

[Lootman]

I strongly suspect that there are many more out there. These articles will miss all the investors with more than one ISA. And on the whole I would expect the more your assets the more likely you are to have shared them about.

While I fall well short of the target I have multiple ISA's so won't show up on these lists ever, even if I'm spectacularly succesful!

Yes, I'm amazed HL only have 579. I'm there and my wife very nearly is, and that is after some disasters too!

For HMG it is a good ploy to get us oldies to build up IHT'able assets and then clobber our estates. It's worked with us

Yes, I suggested earlier that ISAs lose their shine a bit when you consider that the government will be sitting there ready to take 40% of its value upon your expiry (and allowing for the spousal transfer facility).

Which is why after dutifully maximising my ISA (I only have the one) for 34 years I am considering starting to draw it down. The prospect of tax-free withdrawals and the ability to mitigate IHT as a result is becoming more compelling. Whereas with my taxable holdings the uplift in cost basis upon death potentially makes it a better vehicle for an inheritance.

Assuming current rules continue, of course.

[Adamski]

Think it takes huge amount of perseverance to get there, consistently saving for up to 40 years. With life events along the way, and temptation to spend on cars, second home, family gifts. You can understand why only small minority would get there.

[Adamski]

previous comment assuming a normal salary, of course on big bucks would be easy.

[mc2fool]

So, in the days of PEPs, could one put both the £6K max into a general PEP and £3K into a single company PEP each year?

[Lootman]

So, in the days of PEPs, could one put both the £6K max into a general PEP and £3K into a single company PEP each year?

For a while you could only invest the maximum £6,000 if you invested in individual UK shares. If you wanted funds and collectives, including investment trusts, then there was a lower limit which I cannot recall now. £1,500 maybe?

The single company PEP was in addition, and precisely that, so each year you could invest up to £3,000 in only one share, but then choose a different one for the next year, and so on.

Over time the rules were relaxed to include foreign shares, funds and so on, whilst the single company PEPs were abolished and could be merged into an ordinary PEP.

[mc2fool]

So, in the days of PEPs, could one put both the £6K max into a general PEP and £3K into a single company PEP each year?

For a while you could only invest the maximum £6,000 if you invested in individual UK shares. If you wanted funds and collectives, including investment trusts, then there was a lower limit which I cannot recall now. £1,500 maybe?

So is Wikipedia wrong? That says the general PEP could only contain "qualifying collective investments". https://en.wikipedia.org/wiki/Personal_equity_plan

[Lootman]

So, in the days of PEPs, could one put both the £6K max into a general PEP and £3K into a single company PEP each year?

For a while you could only invest the maximum £6,000 if you invested in individual UK shares. If you wanted funds and collectives, including investment trusts, then there was a lower limit which I cannot recall now. £1,500 maybe?

So is Wikipedia wrong? That says the general PEP could only contain "qualifying collective investments". https://en.wikipedia.org/wiki/Personal_equity_plan

That is not how I remember it, although of course we are talking about 30 or more years ago.

The reason I remember it that way is because at the time I had no interest in holding individual shares, only investment trusts. But if I stuck to ITs then my annual contribution limit was lower, so I sucked it up and started buying UK shares.

But yes, I do recall that at one point UK and EU investments were allowed where others were not. I am sorry I cannot remember more accurately than that, but perhaps someone else here does?

[tjh290633]

For a while you could only invest the maximum £6,000 if you invested in individual UK shares. If you wanted funds and collectives, including investment trusts, then there was a lower limit which I cannot recall now. £1,500 maybe?

So is Wikipedia wrong? That says the general PEP could only contain "qualifying collective investments". https://en.wikipedia.org/wiki/Personal_equity_plan

That is not how I remember it, although of course we are talking about 30 or more years ago.

The reason I remember it that way is because at the time I had no interest in holding individual shares, only investment trusts. But if I stuck to ITs then my annual contribution limit was lower, so I sucked it up and started buying UK shares.

But yes, I do recall that at one point UK and EU investments were allowed where others were not. I am sorry I cannot remember more accurately than that, but perhaps someone else here does?

I think that Wikipedia is wrong. Initially you could only have 25% of a PEP in a collective investment fund, but you could be 100% invested in equities, which might have included Investment Trusts. I think that it was 1992-3 before you could be 100% in collective funds. That is certainly the year in which I first opened a PEP with a unit trust manager. I did so in the following 3 years, and also opened a Single Company PEP in the year after that (1996-7). You may recall that initially the maximum allowed in a Tax Year (1987-8) was £2,400, increased to £3,000 in 1988-9 and to £6,000 in 1989-90, where it remained. I am not certain when Single Company PEPs began, but you were allowed £3,000 per year in one of those, possibly from 1992-3.

There were TESSAs as well for cash deposits from 1990-1, where you could build up to £9,000 in an odd pattern, £3,000 in the first year, £1,800 in the next 3 years and £600 ijn the final year, after which you could transfer the lot to a new TESSA, but you could not run another one in parallel.

Then Gordon Brown changed it all with ISAs as we know them today, initially at £7,000 per year, either in cash, shares or both, but not more than £7,000 in total paid in per year.

TJH

[kempiejon]

Then Gordon Brown changed it all with ISAs as we know them today, initially at £7,000 per year, either in cash, shares or both, but not more than £7,000 in total paid in per year.

I think when ISAs were new the cash was capped at £3k.
https://www.thetimes.co.uk/article/how- ... -gr0v9b2hk

[GrahamPlatt]

Frankly surprised that anyone would be identified as an ISA millionaire on one platform. Given that most sensible (and I take it that if you’ve saved/made £1m you’re sensible) investors would spread risk, does that mean that most of these “millionaires” are multi-millionaires?