New research has revealed that there are now more than 1000 ISA millionaires in Britain, says Peter Sharkey.

According to research published earlier this week, Britain is now home to more than 1,000 'ISA Millionaires' – that's people who have accumulated more than £1 million inside the tax-free wrapper of an Individual Savings Account (ISA).

The quite astonishing fact published adjacent to this headline-gripping news is how similar these people are. You might think that individually, they would resemble the caricatured City trader: loud braces, loud voices and equally loud shirts, constantly shouting 'buy!' or 'sell!', but this would be wide of the mark. In fact, the three principle characteristics displayed by ISA millionaires are discipline, calmness and patience.

Actually, it's not entirely accurate to suggest that this elite group of 1,000 super-savers have used their annual ISA allowance to build a seven-figure savings pot. ISAs have been with us for two decades; prior to that, Personal Equity Plans PEPs), which offered broadly similar tax and savings advantages, had been around since 1987. This means that anyone saving the maximum annual ISA or PEP allowance every year since would have accumulated £270,000. In order to reach £1 million, they would have had to enjoy average annual returns of 8.5pc, clearly very achievable over the 32 years since PEPs arrived on the scene.

Lester Petch, chief executive of TAM Asset Management, an experienced fund management company offering low-cost ISAs, is not surprised to learn how similar in attitude and outlook the ISA millionaires are.

'If you wanted to create an ISA millionaire template which people could emulate, then you would start by emphasising the importance of having a regular savings habit, complementing this by explaining the need for discipline. Savers are unlikely to make a million if they're constantly chasing the next big investment theme,' says Mr Petch.

He adds: 'Perhaps the ISA millionaire's most essential characteristic is an understanding of risk. It's important that savers are comfortable with the level of risk they're taking. Should they be too gung-ho and take too much, it can come back and bite them, destroying – or severely undermining – their portfolio. Taking too little risk can also affect returns and mean that people never achieve their longer-term objectives, whether that's building a £1 million savings pot, buying a house, or retiring in comfort.

'However, when I'm asked if it is still possible to save £1 million inside an ISA, my unequivocal answer is a resounding 'yes'. In fact, I'm confident the number of ISA millionaires will rise significantly over the next few years.'

The research also highlighted another important characteristic common among Britain's ISA millionaires: their willingness to 'make their money sweat'. In other words, they put their money to use rather than let it wallow in a bank account offering historically low returns. Average investors have around 13-14pc of their portfolio in cash, whereas the ISA millionaire keeps just half (7pc) of that amount with their bank.

The annual ISA allowance has risen regularly over recent years and now stands at £20,000, so how much would you need to save and for how long in order to hit the magical, seven-figure number?

Assuming you make full use of this and all future years' allowance (which remains unchanged for the foreseeable future), should your annual savings achieve returns of 5.5pc, the stock market's average for more than a century, then within 24 years you would have accumulated £1,068,151.

If setting aside £20,000 is a bit of a push, let's assume you currently have savings of £3,000. Saving £100 a week into an ISA which also achieves 5.5pc annual returns would provide an attractive pot of £290,044 in 25 years. Bear in mind that as your circumstances change over time, it's most probable that your level of contributions could increase which would almost certainly provide a significant boost your savings.

'The keys to achieving impressive longer-term returns from an ISA are to start investing as early as you can; be realistic about the level of risk you can afford to take; be disciplined when markets experience wobbles and make the most of your annual allowance,' notes Mr Petch, an observation with which it's difficult to disagree.

TAM Asset Management Ltd offer investors the opportunity to invest in a variety of ISA portfolios before the end of the 2018-19 tax year. For further details, please visit the MoneyMapp website.

THE WEEK IN NUMBERS

•27

As the article opposite explains, Britain is now home to an estimated 1,000 ISA millionaires. The ranks have been swelled significantly in recent years: in 2012, only 27 people were believed to fall into the same category.

•6

Generally speaking, there are six important steps investors must take if they're to become an ISA millionaire. Making the most of the annual allowance is one, as is the need to reinvest dividends, but perhaps the most crucial is the willingness to invest for the long term.

•0.2pc

Although the Bank of England base rate is 0.75pc, an estimated 50 cash ISAs offer an interest rate equal to or lower than this. Three institutions (NatWest, Santander and the Principality) pay savers just 0.2pc a year.

•2

No-one is allowed to pay into two ISAs of the same type during the same tax year. Rules permit savers to open say, a cash ISA and a stocks and shares ISA, but opening two cash ISAs, for example, will trigger a letter from HMRC although there are no penalties for making such a mistake.

For further financial advice, check out Peter Sharkey's regular column, The Week in Numbers.