Amassing a multi-million pound investment portfolio is a great achievement.
A massing a multi-million pound investment portfolio is a great achievement.
Managing to build it up within Isas – where no further tax will fall due on capital gains or income – is an achievement of an altogether different magnitude.
The strict limits on Isa contributions (and contributions to Isas’ predecessor, the Pep) means that reaching Isa millionaire status typically requires a combination of dedicated saving and exceptional investment returns.
Isa allowances have become far more generous in recent years – rising to £20,000 per year from this April – and so in future the club is likely to grow.
But for the time being the Isa millionaires remain a highly elite group, thought to number not more than 1,000.
Of these, Balbir Bagria, 57, a former IT systems analyst, must rank among the most successful.
He and his wife Jasvir have been living off their joint Isa investments since 1999, when Mr Bagria retired at the age of 39. Mrs Bagria stopped working at roughly the same time.
Over the course of the Nineties Mr Bagria and his wife contributed a total of about £176,000, first to Peps and then to Isas.
T hey stopped adding new money to their respective accounts after 2000. Those initial investments, while substantial, have grown with astonishing success to become a multi-million pound portfolio today, capable of providing an annual six-figure income on which zero tax is payable.
Mr Bagria oversees the portfolio with help from his wife, using standard do-it-yourself Isa accounts from Barclays stockbrokers. Such success has not come without risk.
Mr Bagria runs a highly “concentrated” portfolio that contains only 10 to 15 stocks at any one time.
Far from poring over reams of data late into the night, he commits around six hours a week to research.
The returns have been staggering. If you had given Mr Bagria £1,000 in 1993, he would have grown it to £287,000 by the end of 2016.
F ew professional investors can boast any such record. Indeed, his annualised returns of 26pc exceed the performance of billionaire Warren Buffett, founder of Berkshire Hathaway.
Had Mr Bagria done as most Isa investors do and chosen a well regarded unit trust offered by a major fund group, his returns would have been pedestrian by comparison.
The best-performing fund over the period 1993‑2016 – Schroder US Smaller Companies – would have turned the same £1,000 into £25,000.
A commendable result, but nothing next to Mr Bagria’s achievement. The best-performing mainstream UK-invested fund, Fidelity Special Situations, would have grown £1,000 to £21,550.
Telegraph Money spoke to Mr Bagria to find out how he did it.
“My first degree was in biochemistry and my masters was in computer science. When Peps were launched I had been thinking about long-term savings, and I thought they were a great idea, ” he said.
