What better way to earn long-term cash than investing in a stocks and shares ISA? For me the answer is no. These tax-efficient products have proven to be one of the smartest ways to build wealth, providing average annual returns of over 9%.

Of course, stock markets can be volatile at times. However, over time, few asset classes have delivered outstanding and reliable returns from global equities. Consider the wise words of billionaire investor Warren Buffett. Currently retired Berkshire Hathaway The CEO noticed this perfectly

in the 20th century, the United States experienced two world wars and other traumatic and costly military conflicts; depression; a dozen recessions and financial panics; oil shocks; flu epidemic; and the resignation of the disgraced president. However, the Dow rose from 66 to 11,497.

Do you have £500 to invest every month? Here’s how ISA investors can ensure a comfortable lifestyle in retirement.

Building wealth, reducing risk

With a Stocks and Shares ISA, individuals are protected from all types of taxes. It’s similar with Cash ISAs. As a result, people are more likely to build wealth before retirement with these packages because they have more cash to invest and accumulate over time. And once they retire, they don’t have to pay a penny in income tax when they take money out.

Add to that sturdy long-term stock market performance, and these products can generate truly life-changing returns.

According to Moneyfacts, since 2015 the average Stocks and Shares ISA holder has achieved an average annual return of 9.64%. For Cash ISA savers, the figure is 1.21%. I think a combination of both can be a great way to balance chasing substantial profits with mitigating risk.

Passive income of PLN 70,000 pounds

Let’s assume the investor has £500 left at the end of each month. They decide to split the split 80-20, with the first portion going to purchase stock and the rest in cash.

We’ll also say they can achieve the returns ISA investors have enjoyed over the last decade. After 30 years they would retire with £880,996.

If they then invest in dividend shares yielding 8%, they will enjoy a juicy annual passive income of £70,479.

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.

A world of possibilities

What I also like about the Stocks and Shares ISA is its versatility. Through these products, investors can own a wide range of stocks, mutual funds and funds, helping them diversify by providing risk protection and unlocking multiple growth and income opportunities.

Witan Alliance (LSE:ALW) is in my opinion the best mutual fund to consider for an ISA. Can be exchanged for FTSE100but has a diversified portfolio of global stocks (224 to be exact). These include rapidly growing US technology companies such as Nvidia, MicrosoftAND Apple alongside miners, banks, drug producers and other stocks from around the world.

Over the last 10 years, the value of the trust has increased by 157%. The dividend also continues to grow, having increased every year since the delayed 1960s. As a result, since 2015 it has provided an average annual return of 11.4%. This is more than the 9.64% achieved by the typical ISA investor!

Alliance Witan may lose value during a broader stock market downturn. However, I am confident that in the long run it will continue to provide returns that will fund a very comfortable retirement.