Over time, transferring money into an ISA can be an uncomplicated way to build long-term tax-free wealth. But how large can such a nest egg be?

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

The answer depends on several factors: how much you put in, how long it lasts, and how much it grows (or doesn’t grow).

I’m doing math

For example, imagine someone pays £150 a week into an ISA for 35 years.

How much this escalate will depend on their compound annual growth rate, or CAGR. At a CAGR of 5%, it would reach over 720,000. pounds.

At 10% the figure would be £2.2 million. At 15% CAGR after 35 years the ISA should be worth £7.3 million. Yes, £7.3 m!

Difficult, but doable

CAGR includes capital gains, but also dividends. However, capital losses (from selling the shares for less than you bought them) would absorb this situation. And dividends are never guaranteed.

Another issue some people overlook is the negative long-term impact of transaction fees and account maintenance costs, so it pays to hunt for the best stocks and shares ISAs.

Is a 15% CAGR possible – or even 10% or 5%?

All three are achievable, but even 5% may be more challenging than it seems because over the long term (e.g. 35 years), there will be both good and bad years in the market. Very careful stock selection would be required.

I also think 15% is doable, but it is above what most investors would achieve in their ISA over the long term. Taking steps to be a good investor can assist improve your results.

You’re looking for brilliant action

Success stories can give us some clues.

One UK stock that has left its 15% CAGR target behind is Filtronic (LSE:FTC). It’s already here 2406% in just five years.

It’s uncomplicated to point to one key reason: Filtronic has won several huge contracts with SpaceX, which is its shareholder.

This means that there is a risk of concentration. If something happens to disrupt this relationship or SpaceX’s needs change, Filtronic’s revenues could plummet.

However, a more crucial question needs to be asked: why was SpaceX content to purchase a number of specialized solid-state power amplifiers from a fairly compact company based in northern England?

This is not charity. Filtronic has stated that the space market will grow and needs very specialized components that only a circumscribed number of companies around the world have the ability to make. SpaceX came knocking as a result of Filtronic’s strategic choices.

It is investing in the development of its capabilities, being ready to meet any escalate in demand not only from SpaceX and other space companies, but also from other customers, such as manufacturers in the aerospace industry.

It entered the second half of the current financial year with a record order book and also points to “increasing customer diversificationThis could assist reduce the concentration risk I mentioned above.

Filtronic’s share price has risen because it offers an attractive value proposition in a growing market. I consider this a share worth considering.