I’ve always believed FTSE 100 stocks are a great way to build my wealth, but I didn’t realise how good. New research shows there are thousands of ISA millionaires in the UK, and they’ve loaded up with shares on the index.
Hargreaves Lansdown reports 579 ISA millionaires on its platform, and they’re big on dividend-paying FTSE 100 stocks.
Oil giants BP and Royal Dutch Shell, pharmaceutical companies AstraZeneca and GlaxoSmithKline, financials Lloyds Banking Group, Legal & General Group and Aviva, and National Grid, Unilever and Vodafone Group make up their top 10 picks. They all come with company-specific and sector risks, of course, but I’d buy them.Â
I’d buy these FTSE 100 stocks
Perhaps that isn’t surprising. When you aggregate 579 different ISA portfolios, it’s inevitable that big, popular FTSE 100 stocks will appear more frequently.
However, it’s still a worthwhile reminder that investing in solid blue-chips is a great way to build wealth. These giants may not always deliver stellar share price growth, but their dividends can roll up year after year. That’s not guaranteed though, and all share investing includes the risk of losing money too.
That’s why it’s interesting that the data also shows ISA millionaires ‘play it safe’. They’re less likely to hold the most risky FTSE 100 stocks, such as airlines and hotel groups, that may not make it through the pandemic. In other words, they didn’t need to make big calls or take excessive risks to build a million.
Platform AJ Bell has also published its ISA millionaire data and this shows they prefer individual shares to funds. An incredible 83% of their portfolios are in stocks, but just 14% in pooled funds. It said those with larger sums can afford to take the higher risks of investing in individual equities, because they have assets to diversify appropriately.
The average number of investments held by AJ Bell’s ISA millionaires is 28. ISA millionaires are putting their eggs in lots of different baskets (partly because they have so many eggs).
Becoming an ISA millionaire takes time
Again, they focus on FTSE 100 stocks. Most of the ones I’ve listed above also feature, as well as HSBC Holdings, Tesco and Unilever.
Here’s another interesting fact. The average Hargreaves Lansdown ISA millionaire is 71, while at AJ Bell, it’s 69. This reminds me of something I’ve said on the Fool, again and again. The best way to build wealth from FTSE 100 stocks is over the long term. The stock market isn’t a get-rich-quick mechanism. Instead, it can make me wealthy slowly.
That’s why I wouldn’t wait too long before starting investing if I was a beginner today. I wouldn’t do anything clever like trying to time the market either. I think the best thing for me to do is put money into FTSE 100 stocks. And leave it there.
I don’t expect to come close to being an ISA millionaire, but I do plan to build my own retirement wealth in a similar way. By investing in a spread of shares (and funds for overseas exposure) and leaving my money to grow for the long term. I’m talking decades here.