Stocks and Shares ISAs are incredible wealth-building tools. By eliminating the pressures of capital gains and dividend taxes, investors can grow their portfolios at a much faster rate than a classic brokerage account. And if you put in the time, even a diminutive ISA can become a mountain of wealth.

With this in mind, let’s look at a potential path to building a half a million pound ISA account.

Please note that tax treatment depends on each client’s individual circumstances and may change in the future. The content of this article is provided for informational purposes only. It is not intended to, and does not, constitute tax advice of any kind. Readers are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

First steps

As with all investment journeys, it starts with a capital savings. It doesn’t take much to get things off the ground. But to get things off to a decent start, having £5,000 is ideal. Now the question is, how can you utilize this money?

The simplest solution is an index-tracking fund. These investment vehicles simply mimic the performance of an underlying index, such as FTSE100. The UK’s flagship FTSE index has historically returned an average of around 8% a year over the past 30 years. And assuming it maintains that pace, it would take around 58 years to turn £5,000 into £500,000.

Needless to say, this is painfully leisurely. So let’s speed up the process by topping up our ISA with £500 a month. Investing this capital regularly each month would cut the waiting time from almost 60 years to just 25 – more than half!

This already sounds promising, but how can investors accelerate this process even further?

Instead of relying on index funds, investors can take matters into their own hands and start picking stocks directly. This strategy definitely increases the difficulty curve for investors, as it requires much more diligence, discipline, and research. And it undoubtedly comes with more risk, meaning we can lose money instead of making it.

Investing for maximum growth

Investing in bad companies is a proven recipe for wealth destruction. And even buying shares of the best companies in the world can backfire if you pay the wrong price. But if done correctly, this strategy opens the door to higher returns.

Even if an investor manages to earn an extra 2% compared to a FTSE 100 index fund, this would still be enough to reduce the waiting period by a further four years, or to earn an extra £223,000 by waiting a full 25 years.

In some cases, huge profits can be achieved, as history shows. Ashtead Group (LSE:AHT). What started as a diminutive equipment rental company in Surrey has grown into a global industry titan, with the majority of its sales now coming from North America.

Its phenomenal success has resulted in outstanding share price and dividend performance over the past two decades. So much so that over the last 25 years an initial investment of £5,000 is now worth just over £4 million!

Looking at the latest results, Ashtead continues to generate and maintain impressive cash generation, which funds growing dividends. However, the group still has a number of risks to address, particularly in the form of increasingly tough weather conditions. Bad weather delays construction projects and therefore directly impacts demand for its services.

Personally, even with these risks, I still consider Ashtead to be a top-tier company. But for investors looking for great returns, the company is unlikely to provide such explosive returns.

To achieve this, investors will need to start looking at small-cap stocks like Ashtead once did.