Britain now has more than 10,000 Isa millionaires. Yet an even rarer circle is expanding year by year: investors whose tax-free portfolios have climbed beyond £2million.
One member of that elite group, believed to number fewer than 1,000 people, is Jane Barr — not her real surname. The 77-year-old from south London has built an Isa pot worth just over £2million through decades of careful saving, frugal living and steady investing since the mid-1980s. Until she retired, every pound she put away came from a modest salary.
I first met Jane earlier this month at the annual general meeting of Templeton Emerging Markets, the investment trust that represents the largest holding in her Isa portfolio.
I had been invited to speak at the London AGM about the benefits of long-term investing. But after chatting to Jane over a bite to eat and learning she was a double Isa millionaire, I could not help thinking the audience might have been better served hearing from her instead.
Intrigued by her approach, I spoke to her again a few days later — and she more than lived up to expectations. Jane, who shares her home with one of her two adult sons, is plainly a highly astute investor.
Her journey from ordinary saver to multi-million-pound Isa investor is both compelling and instructive. It offers a powerful reminder of what can be achieved by staying invested through market booms, crashes and everything in between, whether through an Isa or a self-invested personal pension.
The habits Jane has followed — patience, discipline and consistency — are the same principles that can improve any investor’s chances of one day joining the Isa millionaire ranks.
Jane, the remarkable 77-year-old from south London, has built an Isa portfolio worth a little more than £2million — all from a modest salary
Jane first became interested in investing during the 1980s when the Conservative government of the time, led, of course, by Margaret Thatcher, embarked upon the privatisation of some of the country’s heavyweight companies – the likes of British Telecom (BT), British Gas, British Airways, British Aerospace and Rolls-Royce.
‘I came from a middle class family where money was always tight,’ she says. ‘My dad was a self- employed antique dealer on the south coast while Mum looked after the family home, me and my two brothers.
‘Dad knew his antiques inside out, but often struggled to make ends meet. I left home knowing that the only way I would get on in life was by being frugal and looking after myself and my money.’
Jane moved to London after university to embark on a career as a media researcher, and while at work her interest in investing was piqued. ‘It was at the time of the British Telecom privatisation in late 1984 and all the office talk was about buying shares,’ she says.
She bought shares in all the privatisations and held on to them rather than bagging instant profits as many investors did.
With the advent of tax-friendly Personal Equity Plans (PEPs) in 1987 and the follow-on ISA (Individual Savings Account) 12 years later, Jane began using these vehicles to amass a portfolio free from tax. Today, her Isa portfolio comprises some 40 holdings. Although some are household names such as National Grid, Shell and Unilever, most are investment trusts.
Her most valuable stakes are in Templeton Emerging Markets and 3i Group – which are both worth about £285,000. Other key holdings include CQS Natural Resources Growth & Income, F&C, TR Property and Scottish Mortgage.
Apart from her £2million Isa with Scottish Widows, Jane also has a self-invested personal pension worth £1.2million and an investment portfolio worth some £300,000, which she is steadily moving across to her Isa (subject to the maximum annual allowance of £20,000 and an eye on capital gains tax).
So what are Jane’s tips for the likes of you and me on how to join the Isa millionaires’ club? Most are pleasantly straightforward and uncomplicated.
INVEST REGULARLY
Jane’s investment philosophy is built around squirrelling money away in an Isa on a regular basis – and then letting the stock market do the rest.
‘I’m a long-term investor even at age 77,’ she says. ‘I tend to invest with at least a ten-year time horizon and don’t get unduly concerned when share prices dip.’
REINVEST DIVIDENDS
She has never taken any income from her Isa. Instead, all the dividends she receives are automatically reinvested, increasing her shareholdings in individual companies. ‘As far as I am concerned, reinvesting your dividends is a sure-fire way to build long-term wealth,’ she says.
‘With every dividend you reinvest, you increase the number of shares you own and, by implication, the opportunity to earn even more income in the future which can then be reinvested. It’s like a snowball, growing larger as it rolls downhill.’
USE INVESTMENT TRUSTS
Although Jane holds shares in many household names, her portfolio is now dominated by investment trusts.
‘I like them because they are diversified across a spread of companies,’ she says. ‘The managers also do all the worrying for you in terms of finding the investment opportunities to grow the trust’s share price.’
VALUE FOR MONEY
Jane likes to find investments where charges don’t erode returns. For example, the ongoing annual charge for F&C, which she holds, is 0.45 per cent. Respective charges for Alliance Witan and Brunner are 0.47 and 0.61 per cent.
MAXIMISE YOUR ISA OPPORTUNITY
Her Isa success has been built on utilising to the maximum her annual Isa allowance – something she has done religiously since 1999 when Isas came on stream.
‘Of course, not everyone now has £20,000 a year available to put in an Isa,’ she says. ‘But try and use as much of your allowance as you can. I’m thrifty by nature and find it difficult to spend money. I would rather forego a daily coffee at my local cafe than lose out on the opportunity to invest a bit more.’
Although Jane has never used an Isa to save, she understands why some prefer cash Isas rather than the stocks and shares variety – for example, wannabe homeowners saving for a deposit or elderly people who cannot avoid to take risks with their retirement capital.
But for those looking to build wealth which will secure them a financially secure retirement, she believes tax-efficient investing through an Isa – or a pension – is the best way forward.
She adds: ‘Over the long term, shares tend to produce better outcomes for investors than cash for savers. So my message to Wealth & Personal Finance readers is to invest regularly and slowly – and be patient.’
KEEP ENGAGED… AND LEARN FROM OTHERS
Jane retired at the age of 51 following a divorce, and she now works one day a week at the Victoria and Albert Museum in London, cataloguing online its traditional jewellery collection.
This gives her plenty of time to engage with her investments, including attending annual general meetings that they hold.
‘A lot of what I’ve learnt about investing has been gleaned from these meetings,’ she says. ‘Not just from the investment managers but from the questions that fellow shareholders ask.
jeff.prestridge@mailonsunday.co.uk
