There are easy ways to build up your savings over time
A family of four could have discreetly accumulated a £1million tax-free investment portfolio in just 10 years simply by maximising their ISA allowances, new research reveals.
Analysis from AJ Bell demonstrates that two parents and two children who invested the maximum permitted into ISAs and Junior ISAs annually since 2016/17 could now be holding around £1.08million. The calculation presumes the funds were invested in a global tracker fund and benefited from market growth over the last decade.
It underscores the enormous potential of tax-free investing and compound returns – though experts acknowledge the strategy demands substantial spare capital each year.
£58,000 annually tax-free
Currently, a family with two children can protect up to £58,000 per year from taxation by utilising the full ISA allowances. Each adult can invest £20,000 annually in an ISA, whilst each child can receive £9,000 yearly in a Junior ISA.
However, the limits were lower 10 years ago. In 2016/17, the family would have invested £38,640 annually – comprising £15,240 per adult ISA and £4,080 per Junior ISA. As the allowances increased over time, the total annual contribution eventually reached today’s £58,000 threshold.
AJ Bell’s analysis reveals that if the family had invested the money each year in the Fidelity Index World fund, their portfolio would have grown to £1,083,174 by the end of February 2026.
READ MORE: Iran war sees travel expert issue ‘big’ warning for Brits with Dubai, Qatar or Abu Dhabi flightsREAD MORE: Martin Lewis explains staggering mistake that could cost you £145,000
Millionaire status in 13 years from today
Families beginning their investment journey now could still achieve this landmark relatively swiftly. Based on 5% annual investment growth after fees, a household putting away the maximum £58,000 yearly could accumulate a combined pot exceeding £1million in approximately 13 years.
In this scenario:
- Two parents contributing £20,000 each annually would amass £744,000 over 13 years.
- Two children investing £9,000 each per year would accumulate £167,000 apiece.
- Combined, this would generate a family ISA portfolio totalling roughly £1.08million.
More modest investments can still hit £1m
Even households unable to invest the maximum could eventually reach seven-figure territory. AJ Bell calculates that depositing £12,000 yearly into each adult ISA and £5,000 into each child’s Junior ISA – totalling £34,000 per annum – could grow to approximately £1.004million over 18 years, based on the same 5% annual return.
Stronger investment performance would accelerate the timeline considerably. Should returns average 7% annually after fees, a family maximising their allowances could hit the £1million threshold in just over 11 years.
The advantage of an early start
Laura Suter, director of personal finance at AJ Bell, explained that becoming an investing millionaire family is more attainable than many households realise. She said: “Becoming millionaires might sound like a pipe dream for many families, but when you break the numbers down it becomes more achievable.”
Ms Suter said: “With the tax year end fast approaching, many people are thinking about how to make the most of their ISA allowances, but it’s easy to forget that children have valuable allowances too.
“The Junior ISA limit is surprisingly generous and, when invested, can become a powerful way to build long-term family wealth.”
Ms Suter emphasised that consistency is the key to long-term success. She added: “By consistently using ISA and Junior ISA allowances and investing for the long term, families can let compounding do much of the heavy lifting. The earlier you start and the more consistent you are, the greater the impact.”
However, she recognised that most households simply cannot afford to invest tens of thousands of pounds every year. “Of course, not every family can afford to invest the full £58,000 each year,” she admitted.
But she noted that even more modest contributions can still build substantial wealth over time: “The good news is that hitting the million-pound target doesn’t have to rely on maxing out allowances, it may simply take longer.”
