3 easy steps to target a £1,000,000 Stocks and Shares ISA!

The number of Stocks and Shares ISA millionaires continues to rocket. The number shot to 5,070 as of April 2023, according to latest figures. The relentless rise of the stock market and huge tax breaks for ISA users are a powerful wealth-building combination.

Angela Smith, senior investment director at Rathbones, notes that “the idea of becoming an ISA millionaire can feel like a distant dream reserved for high earners or lucky stock pickers. But the reality is far more encouraging“.

I hold one of these tax-efficient vehicles myself. And while I’m some way off getting a seat on millionaire’s row, I’ve seen some soaraway successes over the years. Here are three steps investors should consider if they’re targeting a £1m Stocks and Shares ISA.

1. Increase regular contributions

Investing can be harder for many people today as the cost of living crisis rolls on. But being able to regularly put money in the stock market — and to steadily increase contributions over the years — is critical to supercharging one’s ISA.

Let’s say someone invests £500 a month and achieves an 8% average annual return. After 33 years and five months, they’d have built their £1m ISA.

But what if they start with £500 and increase their monthly contributions by 2% each year? If they did this, they’d reach that magic million-pound portfolio in 31 years and two months.

2. Build a diversified portfolio

The next step involves building a Stocks and Shares ISA that spans different regions and industries. This is critical, as it spreads risk across the portfolio and helps provide a stable return over time.

I personally hold between 20 and 30 shares, trusts, and funds at any one time. Games Workshop (LSE:LSE) is one I’ve recently bought more of for my portfolio. With an average annual return of 16% since 2015, I think it’s easy to see why! No other FTSE 100 company has delivered that kind of performance.

The tabletop gaming hobby remains a niche one, but it’s rapidly growing across the globe. And with its Warhammer line of products, Games Workshop has essentially cornered the market. Sales here rocketed 11% in the six months to November, a period in which it again beat City forecasts.

Can the FTSE company keep outperforming, though? It will have to paddle hard as competition increases and consumer spending remains under pressure. Yet I think it can continue impressing, helped by increasing its mass media exposure through mammoth licensing deals like the one with Amazon.

3. Stay patient

The third most important thing to do is to remember that successful wealth creation almost always takes time to achieve.

Smith of Rathbones notes that the key to building a large ISA “isn’t perfect timing or extraordinary risk‑taking, but patience, time, and an iron‑clad discipline to keep investing and resist the temptation to tinker unnecessarily“.

I buy shares with a view to holding them for at least a decade. This way, I give my investments time to compound towards a million pound Stocks and Shares ISA.

The post 3 easy steps to target a £1,000,000 Stocks and Shares ISA! appeared first on The Motley Fool UK.

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Royston Wild has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Amazon, Games Workshop Group Plc, and Rathbones Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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