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When ‘Who wants to be a millionaire?’ first appeared on our TV screens in 1998, few would have thought it would be so successful and run for so long. Attracting some 19 million viewers at its peak, the popular TV game show ran for some 17 years.
The questions – particularly the last few of the 16 required to get right – that even with lifelines such as ‘phone a friend’, ‘ask the audience’ and ’50:50′, only five lucky UK contestants made it to – and correctly answered – the million-pound question.
A secure financial future can sometimes feel impossible to achieve and many pin their hopes on winning the lottery. But, believe it or not, becoming a millionaire in 17 years is possible.
Using the current individual £20,000 ISA allowance as a starting base and assuming the annual capital growth is 5% after charges, a couple could see their ISA pot reach £993,615 in 16 years and £1,085,295 in 17 years*.
With the same assumptions, an individual investing their full ISA allowance could see their investment reach £1,002,269 within 25 years*.
However, not all of us have £20,000 – £40,000 a year to invest! But to increase your chances of becoming an millionaire in your retirement, there are a few simple steps you can take.
1. Start saving early
To make the most from your savings, it’s important to get started as soon as you can. This will give your investment the chance to grow over time. Investing early will also allow you the freedom to take more risk with your investment for potentially higher returns, as you won’t need to worry about having to withdraw your money in the near future.
2. Save as much as you can afford
There are always demands on our hard-earned cash. Whether it is increased bills, holidays or a new car – there are often either more pressing things or more exciting things to spend our money on. A good habit to get into is to increase your savings by the same amount as any pay rises, as soon as you get them. What you haven’t had previously, you won’t miss.
3. Do your research
Do spend time researching the best fund managers. The annual rate of return you achieve on your investments after charges will make an enormous difference to how quickly you achieve your goal.
There are currently 46 Elite Rated funds that have been in existence for the 20 years since the TV programme first aired, ten of which have had the same fund manager at the helm for those two decades.
If you had invested a much smaller sum of money – £10,000 a year for 20 years – two of these funds would have turned you into a millionaire**. If you had been able to invest £20,000 a year for 20 years, eight of them would have achieved the desired result – and even the two most cautious portfolios would have got you close**.
|Fund||£10,000 invested annually for 20 years (£)**||£20,000 invested annually for 20 years (£)**|
|Marlborough Special Situations||1,812,714||3,625,429|
|Liontrust UK Smaller Companies||1,168,277||2,336,553|
|AXA Framlington American Growth||768,568||1,537,136|
|Lowland Investment Company||765,198||1,530,397|
|Lazard Emerging Markets||651,118||1,302,237|
|Jupiter Merlin Growth Portfolio||597,766||1,195,532|
|The City of London Investment Trust||552,572||1,105,143|
|Edentree Amity UK||524,966||1,049,931|
|Jupiter Merlin Income Portfolio||433,284||866,568|
|Invesco Perpetual Corporate Bond||383,125||766,249|
*Source: FundCalibre research team
**Source: FE Analytics, total returns in sterling, over 20 years to 5 September 2018