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A lot of people dream about becoming a millionaire, yet not many realise that by investing early in FTSE shares, even a modest investor can make this dream a reality.
By leveraging the compounding returns of the stock market, staying focused through short-term volatility, and being patient, enormous wealth can be accumulated. And best of all, it can even be enjoyed entirely tax-free when using tools like a Stocks and Shares ISA.
Here’s how.
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.
Aiming for financial freedom
To target £1m, investors in 2026 need three things:
- £500 a month from their salary to invest.
- A sound investment strategy.
- Patience.
Instead of chasing extreme-risk penny stocks, new investors should focus on established enterprises with durable competitive advantages and ample cash flows. Luckily, the FTSE 100‘s filled with such businesses. And one of the easiest ways to start building wealth with them is through a low-cost index fund.
Historically, the UK stock market’s generated close to 8% a year, including dividends over the long run. And assuming this pattern continues, investing £500 a month at this rate would steadily compound into seven-figure territory within around 34 years.
So for those who have just turned 30, now could be the perfect time to start investing to ensure a more comfortable retirement lifestyle. But what if someone’s a little late starting and doesn’t have three and a half decades to spare?
Option one: increase the monthly contributions. Doubling the amount to £1,000 shortens the timeline by eight years.
Sadly, not everyone’s able to spare a grand from their monthly paycheck. That’s where option two comes in.
Boosting stock market returns
Instead of relying on index funds, investors can choose to invest directly into individual FTSE shares. Using a stock-picking strategy is a more involved process and requires a lot more discipline. But when executed correctly, the results can be jaw-dropping.
A perfect example of this is JD Sports Fashion (LSE:JD.). Through intelligent partnerships with leading sports brands, this apparel retail giant rapidly expanded its footprint, positioning its stores as cultural hubs, creating a sticky customer culture.
Over the last 20 years, investors who supported the business along the way have gone on to make a roughly 4,400% total return. That’s the equivalent of a 21% annualised return. And anyone who’s been drip feeding £500 a month since 2006 is now sitting on close to £1.8m!
Still worth considering?
Despite its long-term outperformance, since early 2022, JD shares have actually been stuck on a downward trajectory. A tougher consumer spending environment, alongside an inventory glut from its key partner Nike, has had a harsh impact on its financials.
But could this have created a fresh buying opportunity for new investors?
With a new CEO at Nike’s helm, the inventory levels are starting to normalise. And with the 2026 FIFA World Cup just around the corner, JD Sports Fashion looks well positioned to capitalise on both these tailwinds. Yet, since Nike products still drive close to half of JD’s sales, a prolonged or failed product turnaround could see this UK stock suffer even further.
With a discounted valuation, this business could still be worth a closer inspection. But luckily, there are also plenty of other FTSE shares with exciting long-term potential.
