Building up £100k in an ISA is a common goal. With that kind of money, one has a lot of options financially.

The good news is that with a long-term perspective, a regular savings plan, and a sound investment strategy, it’s definitely achievable. With that in mind, here’s how I’d aim to build a six-figure ISA from scratch today.

Opening the right type of ISA

If I was just starting my wealth-building journey today, and my goal was to build up £100k, I’d start by opening a Stocks and Shares ISA, and maybe also a Lifetime ISA if I was under 40.

The advantage of these ISAs is that they offer access to a wide range of investments including stocks, funds, exchange-traded funds (ETFs), and investment trusts. This means they could help me grow my money much faster than a Cash ISA could.

Meanwhile, contributions into a Lifetime ISA come with a 25% bonus from the government, which again, could help me grow my wealth faster.

Making regular contributions

Once my ISA was open, I’d start a regular savings plan.

Here, I’d work out how much I could afford to contribute to my account every month. And then I’d pay in this amount as soon as I was paid.

This approach would help me save consistently. Even if I was only able to save a little bit of money every month, it would add up over time.

Investing in the stock market

Finally, I would put my money to work by investing it in the stock market. Over the long term, the stock market tends to outperform other assets such as bonds and cash savings.

Now, there are many different approaches to investing I could pursue.

I could invest in index funds such as Vanguard’s FTSE Global All Cap Index. This is a diversified product that provides exposure to over 7,000 stocks globally for a low fee.

Or, I could invest in actively-managed funds such as Fundsmith Equity and Lindsell Train UK Equity. These products are managed by portfolio managers, who try to outperform the market.

Alternatively, I could invest in individual stocks. This approach is higher risk but the potential rewards are greater.

For example, had I invested $5k in Apple shares 10 years ago, I’d now have about $50k (not including dividends). There are unlikely to be many funds that have produced that kind of return for investors over the last decade.

Personally, I’d use a mix of all three approaches. This would lower my overall risk while also giving me the chance to generate high returns.

Hitting £100k

How long would it take me to hit £100k with this approach?

Well, that would depend on my level of contributions and the returns I was able to generate from the stock market.

However, as an example, if I contributed £600 a month into my ISA and generated a return of 9% per year on my money over the long term, I’d hit the £100k mark in less than 10 years.

The post Building a £100k ISA from scratch appeared first on The Motley Fool UK.

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Edward Sheldon has positions in Apple and Fundsmith Equity. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.