Speaker (Ndubuisi 'Andy' Egwim) explains the UK adult ISA annual allowance is £20,000 and walks through an example: maxing an ISA with £20k per year for 10 years yields total contributions of £200,000; with a cumulative (compounded) 50% return over the period this produces £100,000 of capital gains, leaving £300,000 at the end of 10 years. The example contrasts an ISA investor with a regular (taxable) account investor holding identical investments.
Questions this video answers
£20,000
£200,000
50% (cumulative, compounded over 10 years)
£100,000
£300,000
Chapters
Invested 100k. I invested 100k. Or let's just bring it down. What is the ISA allowance per year? Full ISA allowance for adults in the UK? 20k. 20,000. Thank you so much. Okay, so it's 20,000 is what you allowed to invest into an ISA or save into an ISA. Okay, so let's say I put in 20k every year. Okay puts 20k in her ISA. Joel just puts 20k in a regular investment account. They are buying exactly the same thing. They are buying stocks or bonds or index fund or whatever it is. And okay does it for 5 good years. Or let's just say 10 good years. And at the end of 10 years she has put 20000 into her. Sorry, 20,000 times 10. I'm not assuming that everyone can put 20k into the ISA. But let's just for sake of calculation, you max out your ISA, you put 20K. So okay has put in 20,000 times 10. That's 200,000. And Jewel has done 20,000 times 10. Okay, okay. But it's not in answer. They both invested 200,000. Okay, let's assume that they invested into exactly the same things. Exactly the same things. And they make exactly the same returns. So again, for ease of calculation, I'm just going to say that okay made 50 return on her investment. So what's 50 return on 200,000 over a period of years? 10 years. So it's a hundred thousand. So basically okay has invested 200,000 over 10 years and her cumulative return. So it's not 50 in one year. Her cumulative return, her compounded return over 10 years is 50. So okay ends up with 300,000. So that means okay has made what we call a capital gains. Whenever you hear CGT's capital gains tax, okay has made hundred thousand in capital gains. Okay.
