Investing in FTSE 100 and FTSE 250 shares has proven a great way to build wealth over time.

Since its inception in 1984, the Footsie‘s provided an average annual return of around 7%. The FTSE 250‘s long-term return is even greater: it’s 11% since the index’s creation in 1992.

If you’re looking to build big wealth with UK blue-chip shares, here are some top tactics to consider.

Open an ISA or SIPP

The first thing to think about is how to minimise or eliminate the tax due on returns. Over time, this can add up to tens, or even hundreds, of thousands of pounds.

Rather than investing in a general investment account (GIA), I myself own shares in an Individual Savings Account (ISA), and more specifically the Stocks and Shares ISA. I also hold stocks, funds, and trusts in a Self-Invested Personal Pension (SIPP).

With these accounts, investors don’t owe the taxman a penny in capital gains tax or dividend tax. And the annual allowances for these products are pretty generous too.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Diversify like a boss

Setting up an ISA or SIPP is the easy part. The next thing investors should consider is building a diversified portfolio of FTSE 100 and FTSE 250 shares. This takes time and effort, and often involves trial and error.

However, the rewards can be huge. Not only does this tactic allows one to spread risk. It also helps UK share investors to capture a host of growth and income opportunities.

Investors can effectively diversify by buying companies operating in different territories and industries. As an example, an investor could considering purchasing:

• US-focused rental equipment supplier Ashtead Group.
• British high street bank Lloyds.
• Telecoms business Vodafone, whose largest single market is Germany.
• Georgian banking giant TBC Bank.

Investors also have plenty of multinational shares to choose from to achieve this diversification. HSBC operates across multiple Asian markets, for instance, while Unilever sells its consumer goods into 190 countries spanning the globe.

Targeting a £20k+ passive income

Alternatively, investors can invest in a trust to achieve the same result. The City of London Investment Trust (LSE:CTY) is one such investment vehicle.

Today it holds around £2.2bn in assets, more than nine-tenths of which are shares listed in the UK. In total, it holds stakes in 81 different companies, with some of its biggest holdings being HSBC, Shell, RELX, and BAE Systems.

Demand for UK shares has been weak in recent years. This reflects political and economic turbulence that has impacted investor sentiment.

While this remains a threat, interest in British stocks is improving rapidly. So looking ahead, City of London could deliver a better return than its 10-year annual average of 5%.

Let’s say an investor can achieve an average yearly return of 7%, a target I think is realistic. If they invested £500 a month for 25 years in the trust, they could have a £405,036 nest egg.

They could then enjoy a £20,252 yearly passive income if they drew down 5% a year. There are other attractive trusts investors can consider to target similar returns, too.