A family of four could have quietly built a £1million tax-free investment pot in just a decade simply by making full use of their ISA allowances, new analysis suggests.

Research from AJ Bell shows that two parents and two children who invested the maximum permitted into ISAs and Junior ISAs every year since 2016/17 could now be sitting on around £1.08million. The calculation assumes the money was invested in a global tracker fund and benefited from market growth over the past 10 years.

It highlights the huge power of tax-free investing and compound returns – although experts admit the strategy requires a very large amount of spare cash each year.

£58,000 a year tax-free

Today, a family with two children can shelter up to £58,000 a year from tax by using the full ISA allowances.

Each adult can invest £20,000 a year in an ISA, while each child can receive £9,000 a year in a Junior ISA. But the limits were lower a decade ago. In 2016/17, the family would have invested £38,640 a year – consisting of £15,240 per adult ISA and £4,080 per Junior ISA.

As the allowances rose over time, the total annual contribution eventually reached today’s £58,000 ceiling. AJ Bell’s analysis shows that if the family had invested the money each year in the Fidelity Index World fund, their pot would have grown to £1,083,174 by the end of February 2026.

Millionaire in 13 years starting today

Families starting now could still reach the same milestone relatively quickly. Assuming 5% annual investment growth after charges, a household investing the full £58,000 a year could build a combined pot worth more than £1million in around 13 years.

Under that scenario:

• Two parents investing £20,000 each per year would build £744,000 over 13 years
• Two children investing £9,000 each per year would end up with £167,000 each
• Together, that would create a combined family ISA portfolio of about £1.08million.

Smaller investments can still reach £1m

Even families unable to invest the maximum could still eventually reach seven figures.

AJ Bell estimates that putting £12,000 a year into each adult ISA and £5,000 into each child’s Junior ISA = a total of £34,000 annually – could grow to about £1.004million over 18 years, assuming the same 5% yearly return.

Higher investment growth would shorten the journey even further. If returns averaged 7% a year after charges, a family maximising their allowances could reach the £1million mark in just over 11 years.

Smaller investments can still reach £1m

Even families unable to invest the maximum could still eventually reach seven figures.

AJ Bell estimates that putting £12,000 a year into each adult ISA and £5,000 into each child’s Junior ISA – a total of £34,000 annually – could grow to about £1.004million over 18 years, assuming the same 5% yearly return.

Higher investment growth would shorten the journey even further. If returns averaged 7% a year after charges, a family maximising their allowances could reach the £1million mark in just over 11 years.

The power of starting early

Laura Suter, director of personal finance at AJ Bell, said becoming an investing millionaire family is more achievable than many people think.

She said: “Becoming millionaires might sound like a pipe dream for many families, but when you break the numbers down it becomes more achievable. With the tax year end fast approaching, many people are thinking about how to make the most of their ISA allowances, but it’s easy to forget that children have valuable allowances too.

“The Junior ISA limit is surprisingly generous and, when invested, can become a powerful way to build long-term family wealth.”

Ms Suter said consistency is the key to long-term success. She added: “By consistently using ISA and Junior ISA allowances and investing for the long term, families can let compounding do much of the heavy lifting. The earlier you start and the more consistent you are, the greater the impact.”

However, she acknowledged that most households simply cannot afford to invest tens of thousands of pounds every year. “Of course, not every family can afford to invest the full £58,000 each year,” she said.

But she added that even more modest contributions can still build substantial wealth over time: “The good news is that hitting the million-pound target doesn’t have to rely on maxing out allowances, it may simply take longer.”