Making small sacrifices, such as cutting out your daily cappuccino, could transform your finances, according to figures calculated by Fidelity International.
By simply ditching your daily shop-bought coffee at £2.50 a day, five days a week, you can easily find £50 a month to invest in an ISA. And growing even that apparently small sum in the stock market can quickly generate a meaningful investment pot.
Over time, this ISA Cappuccino Plan could lead to significant returns of nearly £7,000 after 10 years, and more than £17,000 after 20 years.
If the thought of giving up your shop-bought coffee makes you twitch, or you just want to reach your investment goals sooner, there are a number of other easy lifestyle changes you could make.
For example, by bringing your lunch to work, cancelling that gym membership you never use or giving up smoking, you could reach the £10,000 mark much sooner.
Tom Stevenson, investment director for Personal Investing at Fidelity International, comments: “Many investors may struggle to stump up a lump sum to get their ISA portfolio started. But don’t let this put you off. In fact, you could quickly build up a significant ISA pot by simply saving on small daily expenses, such as the cost of your daily cappuccino. The longer you can save for, and the sooner you start, the better your results will be, given the snowball effect of compounding.
“Furthermore, a monthly savings plan, where you drip-feed your money into your portfolio, can be a more prudent approach than investing in one lump sum. By investing your money into the market regularly, you will benefit from a process known as pound-cost averaging. This means that you buy more units in your investments when prices are low and fewer when prices are high. Buying at a variety of prices, and spreading ongoing investments over time, helps to cushion your ISA portfolio from dips in the stock market.”
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