Investing the maximum allowance of £20,000 per tax year into a stocks and share Isa could see you becoming an Isa millionaire in 21 years, according to investment platform AJ Bell.
The provider has revealed the average age of its Isa millionaires is 69, although the youngest is just 37 years old.
Today's millionaires have built up their Isa wealth despite being limited to a maximum £7,000 annual contribution for the first nine years. So to get to £1m, they would have had to achieve an average 14% annual growth on maximum Isa contributions.
It's easier to become an Isa millionaire now, provided you achieve a more attainable 7% investment growth and contribute the maximum allowance.
With the end of 2020-21 tax year drawing near (officially it ends on 5 April, but thanks to Easter, some providers have earlier cut-off dates for applications, as soon as 22 March), Which? sets out six reasons you should open a stocks and shares Isa this year.
This is because the Isa provider has to briefly sell your investments before repurchasing them within the Isa. Whether you'll have to pay CGT depends on whether your investments have increased in value since you bought them, and if you'd used up your capital gains allowance.
You don't have to be an experienced investor to open a stocks and shares Isa.
Some platforms have 'ready-made portfolios' to get you started on your investment journey, such as - a Which? Recommended Provider. This means your portfolio will be built and managed for you; all you need to do is select the level of risk you want to take and how long you want to stay invested for.
For online investment advice, the future has already arrived. A number of online services currently help investors decide how to allocate their money and are referred to as 'robo-advice platforms'.
These are digital platforms that provide automated, algorithm-driven investment services with little to no human supervision. Popular names include the likes of Moneyfarm, Nutmeg and Wealthify.
Stocks and shares Isa providers in the UK should be regulated by the Financial Conduct Authority (FCA), meaning you'll have some protection from the Financial Services Compensation Scheme (FSCS).
This means that should your stocks and shares provider collapse, up to £85,000 of your investments will be protected. It's likely that your investments will be kept separately (ring-fenced) from the Isa provider's assets, protecting sums above £85,000, although you should check this.
Bear in mind that this £85,000 protection doesn't cover losses from your actual investments - it's the company that's holding your investments that is covered.
Many people still opt to put their money into but interest rates are currently at record lows. The best rate for an easy-access cash Isa is currently 0.6% EPR (expected profit rate), according to Moneyfacts.
Stocks and shares Isas have the potential to deliver much higher returns, although you need to be thinking long-term.
Typically, you should lock away your money for at least five years, ideally 10, to ride out dips in the market.
Your returns depend on how much your investments are worth when you sell them.
There is a risk you could get back less than you initially put in, butthere's also a chance for inflation-beating returns over the long-term.
Stocks and shares Isas should have 'ethical' investing options.
Ethical investing is an umbrella term for all approaches to investing that consider values as well as returns. The term also covers issues including, but not limited to, climate change, workers rights, gender equality, arms, tobacco and gambling when selecting companies and other assets.
As with all investing, it involves risks. But generally, ethical investing is a way to grow your savings without compromising on your values.
Providers won't focus on ethical funds solely, but most have a strong range of ethical and sustainable funds to choose from.
Unlike cash Isa transfers, stocks and shares Isa transfers aren't just about chasing a better return. There are many reasons why you might choose to transfer your account from one provider to another while not necessarily making changes to the underlying investments. You could try finding a provider with:
Crucially, transfers don't count as new contributions for the current tax year, so you can move money invested in previous tax years in addition to making new Isa contributions.
Before you open a stocks and shares Isa it's important to do your research to ensure the provider suits you and your investment needs.
To find the best investment platforms, Which? asked their customers. We scored platforms on their online tools, customer service, investment information, investment options and value for money.
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