Two years ago, Leon Boros wrote an article for Stockopedia that recounted how he and his wife had built an investment portfolio worth more than £1 million. It was a compelling story that attracted tens of thousands of readers and generated a huge response. It was a very powerful reminder of how effective it can be to invest for the long-term using tax-efficient Stocks & Shares ISAs.
So how has Leon’s investing journey progressed since then? The great news is that he’s written an extensive update in a 26-page e-book entitled, Ten key investing lessons from an ISA millionaire.
The miracle of compounding
Without giving the whole game away, the answer is that the portfolio performance has accelerated, far outstripping the FTSE All Share and SmallCap benchmarks. The compounding - or ‘snowball’ effect - that Leon originally credited for super-charging his portfolio, has continued apace.
The backdrop to all this, of course, is rather mixed. With interest rates jammed at half-a-percent for the last seven years, it’s been a pretty dismal environment for savers. Yet, as Leon points out, the lion’s share, or 77%, of contributions to Individual Savings Accounts in 2014/15 was allocated to cash. To put that another way, only £17.9bn of the £79.5bn tucked away in ISAs found its way into stocks and shares accounts.
In turn, figures show that the vast majority of capital channelled into the stock market by individual investors is actually routed through open ended investment companies and trusts. It seems that the majority of the British public still prefer others to manage their money. That’s despite Leon’s note that there is very little evidence that many ISA millionaires choose this route.
Ten key lessons
In his latest update, Leon explores ten key lessons learned from managing a self-invested portfolio of individual shares. Among the points he raises are:
- Compounding your way to millions, tax-free
- Don’t assume bigger money is smarter money
- Meeting management and networking
- The younger you start, the better
- Use a quantitative approach to filter investment opportunities
- Run a concentrated portfolio when you are young
- Cut losses and run profits
- Avoid blue sky stocks and focus instead on value, reasonably priced growth and quality
- Never forget the importance of liquidity and knowledge
- Have you got what it takes?
For Leon - who runs his own corporate finance consultancy and is a former non-executive director of ShareSoc - there…
