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Ditching the daily coffee can pave the way to save

Buying a £2.50 coffee each morning before work quickly adds up, but that £50 per month could be put to much better use.

 

by Michelle McGagh on Mar 19, 2012 at 10:46

Ditching the daily coffee can pave the way to save

You may see your morning coffee as an essential pick-me-up before you tackle your working day but knocking your caffeine habit on the head could have a serious impact on your savings.

Today JP Morgan Asset Management is giving out free cups of coffee at London’s Liverpool Street Station to show people that saving and investing the cost of a coffee-a-day can make a substantial difference to your wealth.

Many people think it is too expensive to save and invest but £50 a month, or a £2.50 coffee bought 20 working days in a month, can easily add up, especially when you invest in a tax-free individual savings account (ISA). ISAs allow your cash to roll up tax free and be withdrawn tax free.

If you like the idea of saving a manageable amount why not try out ‘fiver a day’ strategy which teaches you how you can grow your money with £5 a day and a jam jar!

Keith Evins, head of UK marketing at JP Morgan Asset Management, said: ‘Investing just £50 a month is as much as people are paying on their daily take-away coffee each month, demonstrating just how affordable it really is to kick off a tax-free ISA pot.’

8 comments so far. Why not have your say?

J

Mar 19, 2012 at 12:07

Bad news for coffee suppliers.

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David booth

Mar 19, 2012 at 17:36

Have never understood why all these people carry cups of coffee around town like the holy grail. A friend of my wife who had a coffee most days found she was spending as much on coffee as on petrol for her small car!!

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Dennis .

Mar 19, 2012 at 18:05

At the other end of the scale my wife and I are pensioners and are happy to go for a walk each day and have a coffee and read the FT, all paid for from our investments over the years.

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Bob saxton

Mar 19, 2012 at 23:15

Those who buy 20 cigarets a day have an option that would easily save over £1000 a year. Can anyone be bother to work out what this is invested and compounded over ten years?

Bob the electrician

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gravedigger

Mar 19, 2012 at 23:56

As an investor in BATS and Starbucks, I am deeply offended by the tone of this article and subsequent discussion. Coffee and cigarettes are a staple of a civilised lifestyle. I am considering buying some Diageo, so we should not discourage the odd glass of malt as a way of coping with the stress of an uncertain financial climate. Saving should be fun!

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JK

Mar 20, 2012 at 09:18

20 coffees a month x 12 months x 40 year working life at £2.50 = £24000. Assuming that that money was instead invested in the stock market at approx 6% real return, this would give a final figure of approx £85k (in today's money). This would fund retirement five years early for someone intending to retire on £20k (in today's money) or alternatively would provide an additional income of approx £350 per month for someone who maintained the same retirment date. (assuming annuity conversion rates of 1/20). I personally use a mini cafetiere at work; which saves me approx £1.50 per cup; takes no longer out of my day when you consider queuing for a coffee as against preparing it yourself; and will allow me to retire approx 3 years sooner than my coffee shop colleagues. Moreover, this is one of perhaps 10 or 20 relatively minor lifestyle choices I have made which mean I will be able to comfortably retire at 50 while most colleagues with the same income and comparable lifestyle will be working into their 60s. That said, their are benefits to working later into life - but it will be good to have the choice. I really enjoy a morning coffee and can see that it may be worth working another five years in order to have a nice coffee shop coffee, however, I think few understand the true long term cost.

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Dennis .

Mar 20, 2012 at 10:28

Who was it that said ?

No pleasure in life is worth forgoing for the sake of an extra two weeks in a nursing home in Weston Super Mare

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J Thomas

Mar 20, 2012 at 16:13

You dont need to buy the coffee at a shop. If you invest in a professional expresso machine at your house and buy tins of Illy coffee when on offer at the supermarket you can make a fantastic strong cappuchino for about 40p.

I would'nt normally advertise but Illy are the best and much nicer than anything you will get when outside. Maximum of two a day though, its bad for your heart otherwise

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