How much money does an investor need in an ISA to target a monthly income of £2,400?
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How much income would it take to match the average UK take home salary? Estimates put the monthly figure after tax at around £2,400, based on early figures for 2026. So that’s £28,800 a year.
With an ISA we can invest in, there’s no need to worry about tax. Whatever we take out of our ISAs, anything from a pound to a million, there’s no tax to pay.
We can currently transfer up to £20,000 a year into an ISA. But even if we can’t manage that much – and most of us can’t – matching that £2,400 can still be an important goal.
Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.
Stocks and Shares ISA
20 years ago, the FTSE 100 it was able to return an average of 6.9% per year. That includes growth in the number of shares and dividends.
Someone who can’t exceed their ISA limit can expect to see £1,380 a year in benefits at that rate, or just £115 a month. And they will need a pot of around £400,000 to reach their £2,400 monthly target. So even if you have a full 20 grand a year, you’ll need to continue for 20 years, right?
Well, actually, no. That’s because we haven’t considered how compound returns work. If we reinvest all our profits, each year we will have more to support our future profits. And it can make an amazing difference.
With constant returns and all income reinvested, it would actually take only 13 years to achieve that income goal.
Popular ISA stocks
Regardless of what an individual can invest, the secret is to start as early as possible, make the most of each year’s ISA limit, and then plow back any annual income. It may be tempting to discount other benefits but the greatest long-term success can come from resisting the temptation.
You may be wondering what the above chart is all about. It shows the two most popular stocks bought from Stocks and Shares ISA accounts so far in 2026. The top five actually varies from week to week, and depending on which provider we ask.
But I like this chart, as it shows how very different operations can add to the success of an ISA. Company Rolls-Royce Holdings has gone up in price in five years – but pays almost no dividends. I Legal & General (LSE: LGEN) share price however, has gone nowhere – but is actually the more popular choice of the two.
Why is it so popular?
Legal & General has a history of paying high dividends. Forecasts put the yield at 8.6% right now, just one point ahead of those historic Footsie returns. And if we can get an 8.6% return consistently, that would reduce our time frame by another two years.
Legal & General comes with risk, as do all stocks and shares. In this case, it is a company in a traditionally cyclical industry. The financial sector is often one of the most difficult problems in any economic situation. And the world economy is not doing well right now.
A look at the last five years of this both helps to underline the important need for diversification in an income ISA. And with that in mind, I rate Legal & General as something to consider right now. And Rolls too, in fact.
