THIS is how to become an Isa MILLIONAIRE in 16 years
COUPLES could become Isa millionaires in just 16 years thanks to the huge increase in the tax-free allowance, according to experts.
Couples could become millionaires in just 16 years thanks to the increase in the tax-free allowance
However, if you started today you would both have to be able to save £20,000 a year to become millionaires by 2033.
If you have young children and use their Junior Isa allowances you could became a millionaire family two years earlier.
The new £20,000 allowance was announced by Chancellor George Osborne in the Budget last week.
The new Isa allowance gives a typical family the prospect of saving £48,160 a year
From April next year savers will each be able to invest £20,000 a year into an Isa instead of the current £15,240.
It is the biggest single increase since Isas were introduced in 1999.
Advisers Tilney Bestinvest calculated that a couple could become Isa millionaires within 16 years if they both invested their Isa cash in the stock market, assuming it would grow by five per cent a year.
The Lifetime Isa will give under-40s £1,000 for ever £4,000 they save
With two children they could invest an extra £8,160 into two Junior Isas, making the family millionaires by 2031 if they paid in the full £48,160 every year.
David Smith, director of financial planning at Tilney Bestinvest, said: “The generous new Isa allowance gives a typical family with two young children the prospect of saving £48,160 a year.
"Even assuming the allowance remains at this level, which is highly unlikely, this gives such a family the potential to become Isa millionaires in only 14 years.”
Money from the lifetime Isa will have to be used to buy a first property
First-time buyers were also given a boost last week with the new Lifetime Isa.
Under-40s will be able to open an account next April and get a £1,000 Government bonus annually for every £4,000 they save.
The money would have to be used to buy a first property worth a maximum of £450,000 or be locked away until age 60.