Interactive Investor

DIY Investor Diary: becoming an ISA millionaire was like completing a marathon

An investor and ii customer, a university administrator in his mid-50s, tells Kyle Caldwell about his journey to become an ISA millionaire, outlining his investment approach and naming his top tips for investment success.

18th April 2024 10:12

by Kyle Caldwell from interactive investor

Share on

London marathon runners pass Canary Wharf Getty

For investors at the start of their investment journey, plenty of inspiration can be taken from the small but growing number of investors who have become ISA millionaires.

Among interactive investor customers, 1,001 have achieved the impressive feat of amassing a seven-figure portfolio.

Key elements in reaching the milestone include time, patience and shrewd investment choices.

The latest investor to feature in our DIY Investor Diary series, which examines the journeys of DIY investors, became an ISA millionaire last December. He says that the achievement, after 30 years of investing in an ISA and Personal Equity Plans (the predecessor to ISAs), was “like running and completing a marathon”. ISAs were launched 25 years ago. 

The investor, a university administrator in his mid-50s, says: “Investing is a marathon not a sprint. Over time, it is the tortoise, not the hare that wins the race. Becoming an ISA millionaire was a source of pride. I am not a big earner and have not inherited megabucks. Becoming an ISA millionaire has been achieved through the miracle of compounding from investing early and contributing as much as possible.”

Financial independence was the motivation behind investing. He says: “My mother taught me to treat money with great respect. For me, money represents security and gives me options. That has always been my motivation behind starting to invest.”

He started investing in individual shares and then investment trusts. While he still owns three trusts today, his portfolio switched over 20 years agoto focus predominately on funds that passively track the ups and downs of a particular index. 

Passive funds, structured as either index funds or exchange-traded funds (ETFs), will by definition never beat an index, such as the S&P 500. However, on the flip side, they will never drastically underperform an index either.

With active funds, those that are managed by professional investors, some outperform, but most fail to consistently gain an edge. Regardless of how well or badly the fund manager performs, investors pay the same fee, which is typically 0.9% a year (£90 on a £10,000 investment). In contrast, passive funds are much cheaper, typically with charges below 0.25% a year, and in some cases lower than 0.1%, depending on which index is being tracked.

“When I started investing, there were no index-tracking funds or ETFs. Nowadays, there’s a huge amount of choice and the fees have come down significantly, our DIY Investor says.

“In the 1990s, I bought and sold a lot of dot-com shares. I also bought and sold other individual company shares I was attracted to. I did OK, no huge loss, no huge gain, and overall my losses slightly outnumbered my gains. I enjoyed the excitement and the sense of equality; here I was, through online trading, competing against the City traders wearing red braces.

“There seemed to be a lot of effort involved in trading shares (doing the research), so I became attracted to index trackers. At that time, you could only buy unit trusts and the markets covered were limited.

“I started out with the FTSE 100 and a US tracker. As new products launched, I acquired a world tracker and a European tracker.”

As ETFs started hitting the mainstream in Europe in the early 2000s, our DIY Investor started buying this type of fund. The core difference is that unlike index funds, ETFs can be traded throughout the day on the stock market, much like individual shares. 

He says: “The launch of ETFs was a huge moment for me - the world opened up - far more index funds and at a lower price. Above all, I could trade the funds immediately as opposed to waiting for a unit trust to be sold at midday.

“I gradually sold off individual shares and concentrated on building up ETFs.”

His reasons for favouring passive over active funds is based on data and wanting to make his own asset allocation decisions.

He says: “The data shows that over the long term – 20 years – most fund managers cannot continually outperform.”

Our DIY Investor adds that if the ETFs he has chosen do not outperform a global index, then he has “only one person to blame”.

Today, his ISA has 19 holdings. The three investment trusts are: Alliance Trust (LSE:ATST), F&C Investment Trust (LSE:FCIT) and ICG Enterprise Trust (LSE:ICGT). The first two were chosen owing to global diversification and their dividends, while the latter provides exposure to private equity.

He says: “Private equity is an area I want to have exposure to, as over the long term it has proven to be a good place to invest, although it is a risky area that requires a strong stomach.”

The other 16 holdings are passive, and most of them are ETFs. He holds several developed market ETFs, including iShares Core FTSE 100 ETFiShares Core S&P 500 ETF, iShares MSCI Europe ex-UK ETF and iShares UK Dividend ETF. In addition, he has money in Vanguard FTSE Developed World ex-UK Equity Index, Vanguard Global Small-Cap Index and Vanguard LifeStrategy 100% Equity.

Thematic ETFs are another area of interest. The investor owns Amundi IS S&P Global Luxury ETF, Amundi MSCI World HealthCare ETF and iShares Global Timber&Forestry ETF.

He says: “By talking to friends and being observant, themes can end up staring you in the face. For example, whatever the future brings, people will always need access to healthcare, so I feel that it is worth investing in.”

However, he is wary of hype and fashionable investments. For example, while he thinks advancements in artificial intelligence (AI) will bring changes in the long term, he is concerned that it is “an overhyped bubble from an investment point of view in the short term”.

To narrow down choice, first this DIY Investor decides what he wants to invest in, either a stock market or a theme. He then researches the most appropriate ETF, taking into account the yearly charge, tracking error and whether it is physically backed. He says: “I am looking for long-term growth. However, I do not tend to differentiate between income versus growth investing.”

Tracking error refers to how efficient an index fund or ETF is in tracking the stock market index it is trying to replicate. The lower the percentage figure (the closer to zero error), the better.

“Physically backed” means the ETF physically owns all the shares. Under the other structure, synthetic, an ETF does not own the shares and instead uses financial contracts to replicate the returns of shares, including their dividends. This approach is more complicated and carries greater risks. The investor says he “inadvertently bought synthetic ETFs” in the past, but when he realised this, he moved to sell them as he does not “100% trust what is going on in the background”.

His top tips for fellow investors include “ignoring the noise of the markets”. He adds: “Invest in what you believe in. Keep an investment log and write down your reasons for investing. You can then look back on it and learn.”

He also urges investors to avoid “letting your head rule your heart”.

“Look at what the data tells you. Index trackers can be perceived as boring, but in the long term, the data shows that over 10 or 20 years they are very hard to beat. I am happy to go with the message from the data,” he says. 

In our DIY Investor Diary series, we speak to interactive investor customers to find out how they invest in funds and investment trusts, what their goals and objectives are, current issues and concerns regarding their portfolio, and what they’ve learned along the way. The premise is to try and provide inspiration for other investors, and we would love to hear from more people who would like to be involved. We do not require those featured to be named. If you are interested, please email our collectives editor directly at:

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Please remember, investment value can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.

Get more news and expert articles direct to your inbox