How I’d aim for a £1m Stocks & Shares ISA starting with just £150

My profits from using my Stocks and Shares ISA are now as high as they were a decade ago. It allows me to shelter the shares I have from tax implications. These include capital gains tax and dividend tax. When I’m trying to build a portfolio worth £1m, the advantages of an ISA can help speed up my goal. If I had to start today with just £150, this is how I would do it.

My investment strategy

I will assume that I have a regular stable income that allows me to set aside £150 a week for investment. Month one is the current point, with four weeks of accumulated earnings (£600) ready.

Depositing money every week gives you more flexibility to take advantage of whatever opportunities are in the market at the time. However, if I miss a few weeks for whatever reason, I can also increase my holdings in my favorite stocks that I believe in for the long term.

Therefore, my investment strategy will look like this. One week I noted that a bad trading update has reduced growth stocks by 10%. However, I was optimistic about the prospects of the business, so I acquired some shares.

With a week to go, I don’t have time to check the market in detail. On this occasion, I decided to buy more shares in the company. This allows me to average the purchase price. If I buy shares on several occasions, it will give me a smoother average price, instead of doing everything in one go.

Allow time to do the work

Following this strategy over time is key to enabling my ISA to grow in value. As the years passed, I hoped that the stocks I owned would appreciate in value. Annual profits can increase, growing my pot faster.

When I want to sell shares, I also benefit from not having to pay tax on profits. This allows me to use the full amount to reinvest in a different company and not lose anything to the taxman. Again, this helps to increase the value of my ISA.

With £600 per month, I will assume an average annual growth rate of 8%. This may seem generous, but if I tilt the ISA into growth stocks and pay high-yielding income, it is not unrealistic. With this forecast, I have the potential to reach £1m in thirty years.

Factors to remember

Three decades may seem like a long time, and it is. However, there are many factors that can speed it up (or slow it down).

If the market goes through a prolonged crash with a deep economic recession, this can slow down the progress of my ISA. My average annual growth rate will decrease or even reverse.

On the other hand, I hope to earn more money in recent years. So I can add £600 a month to £1,000 a month or more. This will dramatically reduce downtime.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content in this article is provided for informational purposes only. It is not intended to be, nor does it become, any form of tax advice. Readers are responsible for conducting their own due diligence and seeking professional advice before making any investment decisions.