Your small swaps can lead to a large portfolio over a five to ten-year period (Picture: Getty Images)
Starting from scratch with investing can be difficult, especially if you don’t know where to get the money from to start buying shares or funds.
However, it is easier than ever to put away just a little in an investment Isa or other account so you can use simple lifestyle changes to make a start on building a portfolio without it being a daunting task.
And then, thanks to the effect of compounding over time, your small swaps can lead to a large portfolio over a five or ten-year period.
To get started, one option is to open a DIY stocks and shares Isa or pension with any online platform.
Consistency is key (Picture: Getty Images)
Some will allow you to invest from as little as £1 a month into low-cost funds that are suitable for beginners, such as tracker funds with a global remit.
Then, make any of the five changes below and put the money you’ve saved straight into these investments.
Five years later you could have anything from £1,360 to £7,500 in your new stocks and shares Isa, depending on which changes you make. Do them all and a few simple habit changes could net you more than £26,000….
Smart swap one: Netflix Premium to iPlayer and free trials of other platforms
Monthly saving: £18.99
Portfolio after five years: £1,360
According to media regulator Ofcom, two-thirds of UK households subscribe to at least one of Netflix, Amazon Prime Video or Disney+.
Can’t stomach ad breaks? Perhaps £1,360 will help soften the pain (Picture: Getty Images)
You might not even have noticed the increasing costs of your subscriptions, or the fact that you’ve ended up on the most expensive plan.
Cancelling one of your streaming subscriptions and diverting that saved money into your investment account could be the start of a long-term investment plan.
If you cancel Netflix Premium, for example, and put the £18.99 a month you save into your Isa you’ll have around £1,360 after five years, assuming a seven per cent moderate rate of investment growth.
Can’t bear to lose a service? Downgrade both your premium Disney and Netflix subscriptions to the basic ‘with ads’ tier and save £22 a month into your investment account.
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Stick with it and you’ll end up with £1,584 after five years if your portfolio grows by seven per cent. Keeping that figure in mind should help you to stomach the ad breaks.
Smart swap two: Three weekly coffees for a flask from home
Monthly saving: £60.45
Portfolio after five years: £4,304
Coffee is an expense many forget about (Picture: Getty Images)
A medium coffee at Starbucks costs around £4.95, so if you’re buying three a week you’ve spent £14.85 on your caffeine hits.
Buy an insulated flask for £20 and you’ll be able to take hot coffee to work for around 30p a cup.
By putting your savings intentionally into your investments as soon as you open up your flask, you’ll be consciously rewarding yourself for your sensible decision making and giving that money as long as possible to grow.
After five years, at a seven per cent return, those three coffees a week could lead to a £4,304 portfolio.
Smart swap three: Your premium phone contract for a cheap Lebara or Giffgaff SIM
Monthly saving: £50
Portfolio after five years: £3,580
If you’re bundling the cost of a new handset in with your phone contract, chances are you’re paying too much every month, especially if you’re happy with the handset you have.
Contracts that include pricey handsets come in at around £55 a month according to comparison sites such as Uswitch.
However, you can get a cheap SIM-only deal for £5 a month from budget providers such as Lebara and Giffgaff.
Meny spent on your SIM coud be invested instead (Picture: Getty Images)
These providers usually include European roaming in your contract and use the same networks as the bigger providers so you won’t be losing out on coverage.
Use your existing handset and put the £50 you’re saving each month into investments and you’ll have £3,580 at the end of five years.
Need a new handset every few years? Buy one on refurbished site Backmarket at £250 in year two and year four and you’ll still have more than £3,000 saved compared with keeping your old deal.
Smart swap four: Weekly takeaway for a weekly fakeaway
Monthly saving: £130
Portfolio: after five years: £9,352
Spending £45-50 on a weekly takeaway plus delivery is a reasonable treat for a family of four, but you could save money by swapping it for a supermarket meal box of Chinese or Indian favourites.
Fakeaways are a great way to save (Picture: Getty Images)
You could save £130 every month by swapping the £45 for a £15 meal kit from Aldi.
Put the £30 into your investments every week on ‘Fakeaway Friday’ and you’ll soon see your balance climb. In three years at seven per cent you’d have £9,352 in your investment pot.
Smart swap five: Cycle in Zone 1-4 London commute for three times a week
Monthly saving: £108
Portfolio after five years: £7,500
Get in the saddle and cycle to work three times a week instead of taking the Tube or train to power up your portfolio as well as your fitness levels.
Put the price of two Zone 1-4 peak fares (£4.80) each day into your investment account, and take away the cost of maintaining your bike as you don’t want your brake pads to fail or be left with a flat tyre and no spare inner-tube.
Even with a £200 budget on wear and tear and an early investment into waterproof cycle kit, a D-lock and high visibility lights, you’d still end up with £7,488 at the end of five years.
Stacking your habits
The money will stack up (Picture: Getty Images)
If you’re willing to make all five life changes, you could amass a significant sum in just five years.
Swap Netflix, your coffee, your phone contract, your commute AND your takeaways and you could end up with more than £26,000.
That’s a figure many of us would find motivating every time we reached for the Deliveroo app or passed a Starbucks.
Savings at a glance
Netflix Premium to free iPlayer and trials — £18.99 a month, £1,360 in five years
Three weekly coffees for a flask from home — £60.45 a month, £4,304 in five years
Premium phone contract to cheap SIM-only deal — £50 a month, £3,580 in five years
Weekly restaurant takeaway to grocery fakeaway — £130 a month, £9,352 in five years
Zone 1-4 TfL commute to 3x/week bicycle trip — £108 a month, £7,500 in five years
TOTAL £367.44 a month, £26,096 in five years
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