Investing is one of the most useful tools for building your wealth, but it takes a bit of patience to start seeing the rewards. For the average AJ Bell customer, those who are 45 to 54 have a median ISA value more than double those at 25 to 34.
The level of wealth among customers tends to grow with age, aided by more time in the market as well as possible extra funds from career progression or inheritance. Median sums in ISAs among AJ Bell DIY investors peak with the 75 and older age group, at £50,744.
Younger investors in the 18-24 bracket held a median of £9,860 in their ISAs, but many people start their investment journey a bit later, with less cash. There’s about double the number of account holders aged 25-34 as there is at 18-24, and the median pot value falls by £2,000 for this age bracket.
What to do if your ISA isn’t up to speed
If your ISA is a lower value than the average for your age bracket, there’s no need to panic. Those who have prioritised their pensions instead may find a bigger chunk of their savings there or may own a home that makes up a big portion of their wealth. The benefit of an ISA is that you can use the money whenever you please and it’s easily accessible, while still being protected from tax.
Those at the beginning of their investment journey should remember that some young ISA holders will have been given a leg up through a Junior ISA built by their family. If a child’s family maxed out their £9,000 Junior ISA allowance from when they were born to age 18, they would have accumulated a pot of £162,000, without even factoring in investment growth. If that grew by 5% each year after fees, it could reach £243,561.
Most of us are not starting with that sort of sum and instead will need to save for our ISA by watching the pennies. But just opening a Stocks and shares ISA in the first place puts you in a select group, given just 16% of Brits have done so, according to an Investment Association survey.
When your investment pot is small, saving will be your most important lever. In the UK, the average portion of income saved per household is 8.9% according to the Office for National Statistics. This means on a £50,000 take-home income you’d be saving £4,450 each year.
If you had a pot of £10,000 to begin with, which grew by 5% each year, the first year of investment growth would only bring in £500, equating to 3.3% of your ISA value factoring in the investment growth, £10,000 pot, and £4,450 of savings. Your savings of £4,450 would be nearly 30%.
But, by year 13, your investment growth would have outpaced the £4,450 you’ve set aside every year. And by year 21, it would be twice as much. If your growth rate was raised just two percentage points to 7%, your yearly investment growth would be larger than your annual contributions within nine years, and double within 15 years.
You can run your own figures to get an estimate of your pot value through our ISA calculator. But remember that growth is extremely unlikely to be as linear as 7% each year, which is why allowing time for your investments to ride out any market bumps is so vital.
Need a boost?
ISAs are already a tax efficient investment vehicle, as they are protected from both income and capital gains tax. But some versions offer an extra boost, with caveats.
The Lifetime ISA
A Lifetime ISA, which will need to be used either for purchasing your first home or after age 60, offers a 25% government bonus of up to £1,000 with you investing up to £4,000 per year. However, you’ll need to ensure you fall within the rules to avoid a 25% penalty on exit. To open an account, you must be between ages 18 and 39, and if you purchase a home must be valued at £450,000 or less.
The government is in the process of phasing out Lifetime ISAs in exchange for another investment vehicle that can be used to purchase a first home. It’s unclear for now exactly what the structure will be, but they have promised that those who have an account will be able to keep the current version. So, if it sounds like it could be the right fit for you, it’s better to start sooner than later. If you aren’t sure, you can open an account with just a few pounds and decide if it’s the right move for you down the line without having the option taken away.
Shop for deals
Not all investments are created equal. Depending on the investment products you choose, you could pay vastly different fees which eat into returns. Investment fees are included when you look at the total return of a product, so you don’t need to do the maths to try and factor them in. Some investments might be worth a larger fee if they are giving you something unique or a high performance, but always check in to make sure it’s still worth it.
For example, the iShares Core MSCI World ETF and the SPDR MSCI World UCITS ETF both track the MSCI World index, and should therefore get quite similar returns. But iShares, with a fee of 0.2%, has lagged behind SPDR over the past five years, which has a fee of 0.12%. It’s a small margin, but once your pot is bigger, it makes a significant difference.
A larger fee doesn’t always mean a worse deal. For tracker funds, sometimes a higher fee can be balanced out by the fund or exchange-traded funds (ETF)'s way of dealing. Having a look at their past performance over a longer time frame, like five to 10 years, can give you a feeling of if one fund consistently outperforms another. However, remember that past performance doesn’t guarantee future returns.
Invest efficiently
You might also find differences in platform fees between traditional funds and ETFs. At AJ Bell, ETFs have a dealing fee of £5 per transaction, or £3.50 if there are more than 10 in a month. Traditional funds have a fee of £1.50, and both ETFs and traditional funds are eligible for regular investing, meaning the once-per-month dealing charge is free if you make a regular monthly investment of £25 of more.
If you hold ETFs on the AJ Bell platform, the annual account charge is 0.25% (taken monthly up to a maximum of £3.50). Meanwhile, traditional funds have an account charge of 0.25% for those with up to £250,000 in their account, with no monthly maximum. Once you hold £16,800 in your account, assuming regular investing and no other dealing, an ETF is generally cheaper. You can check the charging structure to find out what suits you.
Hannah Williford: Investment Writer
Hannah joined AJ Bell in 2025 as an investment writer. She was previously a journalist at Portfolio Adviser Magazine, reporting on multi-asset, fixed income and equity funds, as well as macroeconomic impacts and regulatory changes...
