Most people invest inside a Stocks and Shares ISA to help them live a more comfortable life later on. Some might even reach a point where their portfolio supports early retirement.
But how realistic is this? And how long might it take? Let’s take a closer look.
Aiming for £1.5m
The obvious thing to note is that what one person would need in retirement is totally different to someone else. So is the affordable amount to invest every month.
For example, industry data show that most people fail to max out their £20k annual ISA allowance. When we consider that the median full-time annual salary in the UK was about £37,000 last year, this makes sense.
As such, what sum and time is needed is highly variable. But for simplicity’s sake, I’m going to assume a figure of £1.5m would be enough.
Wealth-building takes time
Now, reaching that amount might sound like a fairy tale when starting from scratch. But the following table shows how quickly this sum could be reached investing £600 every month. I’ve included three rates of annual return (8%, 10%, and 12%).
| 8% return* | 10% return | 12% return |
|---|---|---|
| 37 years | 32 years | 28.5 years |
Taking the middle 10% return scenario, this shows that it would take 32 years to reach £1.5m. So a 30-year-old could quit work and retire at 62 rather than 68 (or whatever the State Pension age is by then).
Were this investor to achieve a higher 12% average return, this would shave nearly four years off.
Some top investors have generated returns far in excess of 12%, including Warren Buffett (an incredible compounded annual return of about 20%). A person generating such a return would reach this target inside 21 years.
However, this type of return is very rare (after all, there’s a reason Buffett is a celebrated billionaire!). Indeed, 12% might even be stretching it, as the long-term global market average is more like 9%-10%.
To show what’s possible, here are two tables showing how quickly £1.5m could be reached investing £1,000 and £1,666 per month (the latter being the maximum allowance).
| £1,000 per month | 8% return | 10% return | 12% return |
|---|---|---|---|
| 31 years | 27 years | 24 years |
| £1,666 per month | 8% return | 10% return | 12% return |
|---|---|---|---|
| 25 years | 22 years | 20 years |
Salesforce
The missing ingredients, of course, are the investments to generate returns. Thankfully, there are thousands of stocks, investment trusts and exchange-traded funds to choose from.
But one I think is worth considering for a diversified portfolio is software giant Salesforce (NYSE:CRM). Its cloud platforms help over 150,000 companies worldwide run sales, marketing, and customer service.
Right now, the stock is out of favour because investors are worried that artificial intelligence (AI) might disrupt Salesforce’s business model. Put simply, if one human with the help of AI agents can now handle the workload of three, a company might logically need fewer software licenses.
However, Salesforce is adapting by charging customers for the work that its own AI agents do (consumption-based pricing). It has closed more than 12,500 deals since launching Agentforce last year (over 6,000 paid), and agentic AI annual recurring revenue already stood at $440m in July.
By 2030, Salesforce is targeting $60bn in revenue, up from $38bn last year. And it has announced a $7bn share buyback plan, signalling confidence in its free cash flow prospects.
The stock’s down 29% from January, leaving it trading at just 19 times forward earnings. At this price, I think it’s well worth considering.
