REVEALED The most popular shares bought by Isa millionaires

BUILDING up a millionpound nest egg may seem an impossible goal for most of us. But thousands of savers have used stocks and shares Isas to invest their way to the £1 million mark since the accounts were launched in 1999.

Far from being a sprint, it is an exercise in getting rich slowly. Consistently paying into your pot and clever investing are the keys.

So how have the millionaires done it? And where do they invest now?

Of course, every investor is different. Some play it safer than others.

But there are surprisingly strong trends that those with larger investment pots tend to follow, which set them apart from mere mortals.

They hugely favour investing in the stock market over holding the money in cash. Isa millionaires hold just 5.2 pc of their money in cash, on average, while they tend to reinvest their gains and dividends regularly. That’s according to data from stockbroker Interactive Investor.

On average, other investors have twice that proportion of their savings in cash.

It is likely to take far longer to get to £1 million if you leave your money in cash. This is because, although interest rates are rising, the returns on shares tend to beat interest rates on cash over the long term.

Investment trusts, which are publicly listed companies that take your money and invest it for you, are the preferred type of investment for millionaire investors. This type of investment differs from an ordinary ‘ fund’ because, as they are companies in their own right, their managers have more flexibility in how they invest.

Investment trusts make up 42 pc of Isa millionaires’ portfolios. By comparison, the typical investor puts less than a quarter of their money into investment trusts.

Other investors tend to spread their money more evenly between investment trusts (24 pc of their portfolios) and ordinary funds (22 pc). The latter are simply pools of money collected from thousands of investors which are then run by a dedicated fund manager, who picks stocks for them.

Dzmitry Lipski, head of fund research at Interactive Investor, warns that while investment trusts can generate higher returns because they have access to extra levers that traditional funds don’t — such as being able to borrow money — they can also fare worse during rocky times.

‘The investment trust bells and whistles mean they can also underperform in a falling market — and because they are listed on the stock market, trusts can also be impacted by overall market sentiment,’ he says.

Oil giant Shell is the most popular stock held by Isa millionaires, according to data from broker Hargreaves Lansdown. Next is pharmaceutical firm GSK and High Street bank Lloyds Banking Group.

Shell’s share price has risen by 8.9 pc over the past 12 months, even after a slide of more than 10 pc in the past month. The recent dip has largely been due to wider turbulence in the stock market, as banking troubles in Switzerland and the U.S. knocked investor confidence.

Shares in GSK have lost 15 pc in value over the past year, while the price of Lloyds shares has been stable, down just 0.5 pc.

Also among the stocks that most commonly appear in their portfolios are insurer and asset management giant Legal & General Group and oil and gas firm BP.

All these stocks have one thing in common — they tend to be high-dividend payers.

When it comes to funds, the Lindsell Train Global Equity emerges as favourite. By investing in the shares of companies worldwide, it has made returns of 4.4 pc over the past year and 47.9 pc over the past five years.

In December, Lindsell Train admitted it had suffered ‘two years of disappointing performance’ as investors pulled their money out of its funds and markets slumped.

Fundsmith Equity is the second most sought-after fund, according to Hargreaves Lansdown. The global fund has gained 2.8 pc over the past 12 months and 77.1 pc over the past five years.

Other favourites among millionaires include the Artemis Income fund and Fidelity Special Situations, which mainly invest in companies listed in the UK; and the BNY Mellon Global Income, which invests globally.

Seasoned investors in the £1 million club also differ from others in terms of when they choose to top up their Isas.

They typically funnelled nearly all of their £20,000 annual allowance into Isas at the start of the 2022 tax year, between April 6 and April 30.

That is double the proportion paid by the average saver during that time, according to Interactive Investor.

Getting your investments in early pays off because it gives your money more chance to grow and helps turbocharge your portfolio when markets are rising.

It would take 24 years to hit the £1 million mark if you paid the full £20,000 into an Isa every year and achieved an annual return of 6 pc after charges.

If your savvy investing led to 8 pc annual returns, it would speed up the process by three years.

The good news is, those who can only put in half that amount — £10,000 a year — don’t have to wait double the time. It would take 33 years of putting this much aside every year with a 6 pc return, according to Laith Khalaf of stockbroker AJ Bell.

Alice Haine, of broker Bestinvest, says staying invested for a very long period, even through rocky times, is compulsory for wannabe Isa millionaires.

‘Ultimately, you don’t need to be invested in niche or obscure sectors to hit the goal of becoming an Isa millionaire, or have a secret winning formula,’ she says.

‘ It’s all about investing as much as you can, as regularly as you can.’