The ‘ISA Cappuccino Plan’: Why it pays to start early
by Alexander Beard, on May 28, 2019 4:48:15 AM
Picking up a cup of joe from your favourite coffee shop can be a great way to start the day, but if you’re spending £2.50 a day, five days a week, that soon adds up. You might say that £50 a month is a small price to pay for kicking off the morning with caffeine, but if you were to put that £50 into a stocks and shares ISA, you could see some real results.
In only five years, you could be looking at a pot worth £3,307.61, after 10 years £7,303.68 and with 15 years under your belt, that’s £12,131.51 – just think how much coffee you could buy with all that interest!
Researchers at Fidelity are putting this information out to encourage people to start what they’re calling an ‘ISA cappuccino plan’; a simple saving plan to help you properly invest in your future. It’s not just about trading your flat whites for a home-brew cafetiere though, as Emma-Lou Montgomery, Associate Director for Personal Investing at Fidelity International, explains; “We all are guilty of frittering away money without realising we’re doing it, whether it is on coffees or even Uber journeys. It’s important to stop and think about what you are spending your money on, identifying where you could make small changes to save some cash.”
It’s just not realistic to expect everyone to have a lump sum with which to start up their ISA portfolio, but by depositing cash little and often, it doesn’t take long to build up an ISA pot that can bring you some considerable interest. Emma-Lou Montgomery continues, “A monthly saving plan where you drip-feed money into your investments regularly is a great way to get the ball rolling. This approach will also mean that you benefit from a process known as pound-cost averaging; where you automatically buy more units in your investments when prices are low. The benefit is that you will be cushioning your ISA portfolio against dips in the stock market by buying a variety of prices and spreading your ongoing investments over a period of time.”
It’s starting to sound like a no-brainer, so why not think about where you might be frittering away any disposable cash. You might not be a coffee drinker, but if you’re buying your lunch every day, you could save £100 a month by preparing it at home, and we don’t need to tell you how much money can be saved and invested by cutting down or cutting out a smoking habit. The earlier you get started, the better your results will be!