With an individual savings account (ISA), it’s possible to build up a lot of wealth. Across the UK today, there are many people with ISAs worth more than £250k.
Looking for tips on how to turn a small ISA into a big one? Here’s a simple three-step strategy to consider putting into action, starting in 2026.
Go with an investment ISA
When it comes to building tax-free wealth in an ISA, the first step is to ensure that the right ISA is being used. From a wealth-building perspective, it makes sense to invest within a Stocks and Shares ISA or perhaps a Lifetime ISA (if eligible) instead of a Cash ISA.
With the first two types of accounts, it’s possible to invest in a wide range of funds and stocks and potentially achieve high long-term returns (8%+ per year). By contrast, with a Cash ISA, returns are likely to be well under 5%.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Make regular contributions
The next step is to contribute regularly. Don’t stress about maximising the £20,000 annual allowance for Stocks and Shares ISAs – just contribute as much possible.
My top tip here is pay yourself first. Instead of waiting until all your expenses are sorted to pay into your ISA, make your ISA contribution before taking care of your expenses.
Invest the money diligently
Once the money is starting to build up within the ISA, it’s time to put it to work. This means investing it.
Now, the key here is to focus on balancing return potential with risk management. The goal should be to build a solid investment portfolio that offers the potential for strong long-term returns and is unlikely to suddenly tank in value.
What does a solid portfolio look like? Well, in my view, it combines passive index funds with some actively-managed or niche funds and individual stocks.
Index funds can be excellent core holdings. These products can provide diversification and portfolio stability.
Actively-managed funds, sector funds, and individual stocks can provide opportunities for higher returns. They can also be a hedge against a period of poor performance for major indexes.
Zooming in on individual stocks, one that could be a worth a look as we start 2026 is Palo Alto Networks (NASDAQ: PANW). It’s the world’s largest cybersecurity company.
Over the next decade, the cybersecurity industry is expected to see prolific growth as cyberthreats become more sophisticated. So, this company appears well placed for long-term growth.
It’s worth noting that recently, it has been transitioning to a platform model in which it offers firms a full range of cybersecurity solutions. This shift has been driving growth and should continue to do so.
I’ll point out that tech stocks like this can be volatile. So risk management is crucial.
I personally wouldn’t have more than 5% of my portfolio in this kind of stock. Limiting position size should help to protect against risks such as a slowdown in growth or loss of market share to a competitor.
The path to £250k
How long would it take to build a £250k portfolio with this strategy? Well, that would depend on the contributions and the returns.
But I calculate that if an investor was to put £750 per month into a Stocks and Shares ISA and they achieved a return of 9% per year over the long run, they’d hit £250k in less than 15 years.
