Millions of people in the UK regularly tuck money into ISAs to keep their gains out of the taxman’s reach. A good portion choose to invest in the stock market, as shares tend to easily outperform cash over time.

According to the UK government, Britons had approximately £430bn invested in Stocks and Shares ISAs by the end of the 2022/23 tax year. This suggests an average account size of about £93,000.

However, ISA wealth is highly skewed. Figures from 2021 highlighted around 4,070 ISA millionaires owning portfolios worth an average £1.4m, with the top handful managing pots worth over £11.6m.

Based on this, I’d estimate that a balance of at least £200k is needed to be anywhere near the top 10% of Stocks and Shares ISA holders.

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.

Markets have created more wealth

Remember, these figures don’t account for the last couple of years. Stock markets have risen since then, especially in the US, where the S&P 500 has surged around 40% in the past 18 months. The FTSE 100 is also up well over 10% in this period when we include dividends.

However, these are just market averages. Savvy stock-pickers who have held popular investments like Nvidia (up 1,100% in two years) and Rolls-Royce (up 660%) will very likely have done even better.

As a result, the value of many Stocks and Shares ISAs will have been boosted higher. I know my investing accounts have. This means the 10% bar might well be higher today — perhaps more than £250k.

What do ISA millionaires buy?

Back in July, DIY investing platform Hargreaves Lansdown released insights into its 1,208 ISA millionaires. It said they had been buying some funds for diversification, especially those invested in US and global technology stocks. But most of their money is still invested in individual shares.

In particular, ISA fat cats love UK dividend stocks like Shell, Legal & General, and Lloyds. Data from other top brokers back this up.

Another popular blue-chip stock is HSBC (LSE: HSBA), which is one I’ve been buying all year long. The banking goliath is offering a market-beating 7.2% dividend yield right now.

I’m bullish on HSBC’s strategic pivot away from mature Western markets towards higher-growth ones in Asia. The region is projected to account for 90% of the 2.4bn new members entering the global middle class by 2040.

Therefore, demand for financials services is only likely to increase, creating a fertile environment for HSBC to grow its long-term earnings.

Naturally, the bank faces stiff competition in Asia, especially from fintech start-ups. It’ll be far from easy pickings. But HSBC’s strong global brand and diverse client base across retail and commercial banking, as well as wealth management, give it significant advantages.

Finally, I reckon the stock’s dirt-cheap price-to-earnings multiple of 7.5 makes it a steal today.

Aiming for the 10%

According to AJ Bell, around a fifth of investors contribute the maximum £20k ISA allowance each year. But the good news is that I wouldn’t have to max out my ISA to build a sizeable pot.

If I manged to invest half that amount (or £833 a month), achieving an average 10% return, I’d get to £1,028,134 after 25 years. I reckon that seven-figure sum might well squeeze my ISA into the top 10%!