How to become an Isa millionaire in just 27 years

Julian Harris
Follow Julian

Who says saving doesn’t pay? We may be living in an era of flat-as-a-pancake interest rates, but chancellor George Osborne’s changes to Individual Saving Accounts (better known as Isas) have given savers a glimmer of future riches.

Sort of.

The clever people at Brewin Dolphin have calculated that, if you started chucking money into an Isa last year, you could have over £1m saved up by 2039.

How’s that for an incentive? Something to bear in mind the next time your credit card’s hovering over a pair of Armanis that you really, really don’t need.

Osborne used this morning’s Budget to reveal that people will be able to stash £15,000 a year away tax-free from July onwards. Previously the allowance was divided between a cash Isa allowance and a stocks and shares Isa allowance, whereas now the lazier among us will be able to just dump it in one single cash Isa.

Assuming that this allowance goes up with inflation, and assuming a long run annual performance of five per cent total return, Brewin’s boffins say your tax-free pot will break through the £100,000 mark by 2018.

It will surpass the half-million mark by 2031, and then just eight years later you will have £1,035,020. Woo!

And that’s a conservative estimate. “If we were to apply the actual performance of the WMA Balanced index over the last 26 years – since it began in 1988 and which has achieved a total annualised return of 8.6 per cent - it would take only 22 years to become an ISA millionaire!” enthuse Brewin.

There we are, then – something to aim for.