IT WOULD take 26 years to become a Zopa Innovative Finance ISA (IFISA) millionaire, the peer-to-peer lender has calculated.
Individuals would need to invest the full ISA allowance – which is £20,000 this tax year – into Zopa’s ISA Plus at today’s target return of 4.6 per cent to hit the million pound mark in 26 years.
This would result in an IFISA total of £1,009,509, with interest earned in that year of £44,395, Zopa said in a blog post on its website on Friday.
In comparison, a cash ISA would be worth £578,487 after 26 years, based on the average easy access ISA rate according to Moneyfacts.
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“Since its introduction in 1999, there have been a handful of UK investors who’ve become millionaires through clever use of their annual ISA allowance,” said Natasha Wear, head of investor products at Zopa.
“By investing the maximum each year, and painstakingly monitoring the market, they have built up fortunes in tax-free earnings.
“They are known as the ISA mllionaires. As annual allowances increase and new ISA types – such as the IFISA offered by Zopa – become more mainstream, their number is set to grow.
As with any long-term investment, it won’t happen overnight. The first ISA millionaires started playing the game way back in ’99, and put in a lot of work over the years to find the right investment options.”
Zopa was the first of the ‘big three’ P2P platforms to launch its IFISA last June, albeit solely to existing investors. The firm reopened to new investors in January, 10 months after launching a waiting list to cope with demand.