Britons could miss Isa goals without advice

Britons could miss Isa goals without advice
Photo: Ron Lach via Pexels

Britons fear they will miss out on their Isa goals by the time they hit retirement, research has warned.

According to analysis from investment app Freetrade and, 41 per cent of UK adults do not think they would pass the £100,000 mark by retirement.

More than half of all the investors surveyed predicted they would have built a pot of £218,000 by retirement. 

The study, which was carried out among 1,000 Isa holders, also said 14 per cent of 18 to 24-year-olds expect to have a £1mn fortune by retirement — compared with 4 per cent across all age brackets.

To add some context, there are 2,000 Isa millionaires in the UK, but this may grow over time as investors build up their pots.

Dan Lane, senior analyst at Freetrade, said: “If a £1mn Isa isn’t in your [client’s] future, the basic habits of monthly investing in a diversified portfolio informed by your financial goals still matters more than the amount in there."

But Lane warned investors that “getting starry-eyed at the big prize and not focusing enough on the groundwork may lead to decisions that are overly informed by short-termism…getting there is all about doing the simple stuff well and consistently." 

Simon Jones, chief executive of Investing Reviews, bolstered Lane’s claim, stating: “With an average annual return of 7 per cent, it would take an investor maxing out their £20,000-a-year allowance around 22 years to reach millionaires’ row.”

The research also found there has been a steady increase in the demand for cryptocurrencies, especially among young people, with 32 per cent of 18-24 year olds indicating that crypto was an appealing long-term choice.

However, cryptocurrencies did not pip Isas in the popularity charts, with 46 per cent of people aged 18-24 stating that investing in their Isa was the priority.   

Jones added: “With all the fanfare surrounding cryptocurrencies, it’s reassuring to see there’s a new tribe of young investors who recognise the tremendous wealth-building powers of the stocks & shares Isa”.

The goals young people have, can possibly be perceived as overly ambitious, but this is where advisers can use their skills to help their young clients or to encourage their older clients to start saving for their children and grandchildren.

Jason Hollands, managing director of Bestinvest, encouraged parents and grandparents to continue save for their children or grandchildren as soon as they are born.

Hollands said: "Making regular investments into tax-efficient savings wrappers from the birth of a child could not just give them a leg up after school or university, but also it could even make them a tax-free millionaire by their early to mid-30s." 

The Freetrade Isa report supported Hollands' statement, as 14 per cent of male and 9 per cent of female Isa savers, cited “family wealth” as their sole reason for saving.