JEFF PRESTRIDGE: Do your research and take a risk on the stock market and you too can be an Isa millionaire

By JEFF PRESTRIDGE FOR THE MAIL ON SUNDAY

Updated: 08:22 EST, 19 January 2014

There are few people sitting in either chamber of the Houses of Parliament who are fervent flag wavers for the cult of saving. Maybe it’s because MPs enjoy lavish pensions – funded by you and me – that most people can only dream about.

Featherbedded, they have little idea how difficult it is for many people to tuck away sufficient money to ensure their retirement is free of financial fear.

While Pensions Minister Steve Webb may claim, with some justification, that his auto-enrolment legislation shows that he cares for savers, I’m not convinced.

Isa millionaire: Lord Lee's success proves that you can build yourself wealth that will look after you until you die

This grand scheme, pushing most workers into a  work-sponsored pension, is designed more to ensure that when these savers retire they do not have to be financially supported by the State with an array of means-tested – and expensive – benefits.

Similarly, most members of the House of Lords, many long in the tooth, have no real desire to promote savings.

Yet there are exceptions, most notably Lord Lee of Trafford, who I had the privilege of meeting last week – 24 hours before he was due to have a major operation.

John Lee, a former Conservative Minister under Margaret Thatcher in the early  1980s, defected  to the Liberal Democrats 12 years ago, leading one Conservative wag to reply ‘Who?’ when asked about the impact of his decision. He has been sitting in the House of Lords since May 2006.

Lee is not necessarily a  flag-waver for the cult of saving through what he says in the  Upper Chamber – he’s more vocal about defence and tourist issues. It’s more through his actions as an investor.

Lord Lee's formula for an Isa million

He is living proof that if you are prepared to invest in the stock market, take time out to do some serious homework on the companies you want to invest in and use the tax shelter offered through Isas (not pensions), you can amass serious wealth.

Lee is a longstanding investor in Isas – and before that Peps. Until recently, he used the full annual allowance. The result is that he has amassed a massive Isa portfolio. And I mean massive. It’s worth considerably more than  £1million. I promised not to reveal the exact sum, so all I will say is that it’s less than £5million.

Among the reasons for his phenomenal success is a preference for companies that are cash-generative, pay dividends, have a track record of making profits – and where the directors have ‘skin in the game’. In other words, they have big personal share stakes, maybe because it is a family business, and so are financially motivated to keep the stock market happy.

He reinvests all dividends from the companies he holds and  avoids investment funds (although he likes investment trusts).  He also steers clear of all biotech, mining and exploration stocks  (too risky).

Above all, he’s  patient and happy to play the long game.

Of course, Lord Lee is an exception – Isa millionaires are few and far between.

But his success proves that, despite the Government’s disparaging attitude towards savers, you  can build yourself wealth that  will look after you until your dying day.

Those readers who are suitably inspired by Lord Lee should go out and buy his book, How To Make  A Million – Slowly.

It could be the first of many successful investments you’ll make.

...And for those DIY investors, Hargreaves finally reveals new prices

Fund supermarket giant Hargreaves Lansdown last week played its hand – minus a couple of digits – when it announced new prices for about 520,000 customers who trade investment funds on its Vantage platform.

It is a welcome step in the regulator’s crusade to stamp out hidden commissions that have long existed without an ordinary investor’s explicit understanding or approval.

The majority of Hargreaves’ clients, who hold assets of £250,000 or less, will pay an annual fee of 0.45 per cent,  come the start of March. That’s £1,125 a year for anyone with a quarter of a million, or £45 for someone with £10,000.

Meanwhile, managers whose funds Hargreaves recommends have been persuaded (bullied?) to lower their own charges. The overall result is a better deal  for customers.

Welcome though lower costs are, the broker’s ruthless price-trimming exercise should be treated with a dose of caution.

Quality, reputation and service – as well as price – should be top of the checklist for all investors in search of a fund platform.

It’s a message we will reiterate as rivals to Hargreaves declare their hand in the days and weeks ahead.