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How Long It'd Take To Hit £1M If You Maxed Out Your ISA

Updated: Nov 14, 2021


It takes a while to grow your portfolio to 7 figures, but just how long would it take if you used your maximum annual ISA allowance every year?


If you didn't know, the maximum amount you can put into an ISA in a financial year at the time of writing is £20,000.


So how long would it take to reach £1 Million by fully utilising that allowance?


You'll find out in this article!


Why Having A S&S ISA Is Vital To Your Long-Term Wealth

Before I get into how long it'd take to be a millionaire from a maxed out ISA, I wanted to remind you why it is so important to have one.


Putting your savings into a Stocks & Shares ISA rather than a traditional savings account or Cash ISA will enable your money to work harder for you. With interest rates so low savings accounts and Cash ISA's do not protect your money from the effects of inflation. If the rate of inflation is higher than the interest rate on your Cash ISA or savings account, then effectively your money is losing purchasing power.


You know when your parents say £5 used to be worth more "back in their day"?


Well, what they are saying is correct. £5 will always be £5 but, £5 a generation ago bought you far more than £5 would nowadays. This is due to price inflation.


So if you saved £1,000 in a savings account with a 0.5% interest rate, and inflation for the next five years averaged 2%, prices would be rising 1.5% faster than your money was. Yeah you'd have slightly more money after that 5 year period, but its purchasing power would be reduced overall.


However if you invested that £1,000 in an Stocks & Shares ISA, and your annual return over the same 5 years was 3%*, you'd not only have more money but it would have outgrown inflation by 1%, if the average rate of inflation was 2%.


I hope this makes sense. Basically, if the interest rate you are getting on your savings account or Cash ISA is less than inflation, it is detrimental to your financial health. The best rate you can get on a Cash ISA is 1.5% at the moment, so if inflation is higher than that (which it is, currently), then you're losing out.


*used a lower percentage assumption due to the shorter time frame


How Long It Would Take To Reach A Million With A Maxed Out ISA


Moving on to the main topic of this article, how long would it take for you to reach £1 Million with a fully maxed out ISA every year?


Well, lets visit the compound interest calculator...



As you can see, starting with a £0 balance and contributing the maximum £20k per year would make you an ISA millionaire in just 21 years!


That's pretty damn fast!


But lets look even further into it. How long after that first million would it take to reach the second million? Take a deep breath, here goes...



Can you believe it? It would take just over 7 years to grow your ISA from £1 Million to £2 Million! That's a third of the time it took you to reach your first million!


Lets just check out one more milestone before we finish this article, how long would it take to turn that £2 Million into £5 Million?


Again, another deep breath...


This is where you see the incredible power of compound interest come to life, it would take just another 11 years to turn your £2 Million into £5 Million, after it took you initially 21 years to reach your first million. It's crazy stuff!


So to wrap this up, to go from nothing to £5 Million it would take you just over 39 years, if you used your maximum ISA allowance every year assuming an 8% annual return.


Now obviously there is a big caveat here, not everyone can max out their ISA every year. That includes me, I'm nowhere near that level of income yet at 29 years old. And you probably aren't too.


Nevertheless, I thought this would be an inspiring and entertaining thing to think about. For most people it would take a lot of time to be able to invest £20k per year. But even so, if you could only reach that kind of investing potential by the age of 40, by the time you were 61 you'd be a millionaire just from your ISA alone.


Being aware of the power of compound interest is so important in your investing journey! And even if you can't max out your ISA every year, it is worth trying to use as much of your allowance as possible, because compound interest will help accelerate your growth towards financial freedom!


If you enjoyed reading this article, please consider buying me a coffee on Ko-Fi. All coffees will be reinvested back into the website and not thrown at a barista who got my order wrong.

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