How much you could save for retirement if you invested £3 a day

Investing over a long period of time can lead to impressive returns – even if you’re investing small amounts

Savers who started investing £3 per day at the age of 20 could have a savings pot of £2.29m by the age of 70, according to analysis.

Someone who put £3 each day – a total of £1,095 per year – into an investment fund from age 20 would invest £54,750 over 50 years.

This could see their money grow to between £560,698 and £2,291,845, according to investment app, Kaldi.

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The end figure would depend on how their investments performed over time, but the figures are modelled on growing between 7.57 per cent and 11.49 per cent.

The investment app says the figures show the benefit of investing, rather than saving in cash.

Long term, investing can lead to higher returns than cash savings, though the value of someone’s money can go down as well as up.

The Government is pushing more people to invest by changing the rules on ISAs – wrappers that allow people to gain interest or see investments grow, without having to pay tax on the money made.

Currently, people can put £20,000 into ISAs – in either cash or stocks and shares – but from 2027, people will only be able to put £12,000 a year into cash if they are under 65, with the remaining money for investments alone.

“At a time when cash savings feel comforting but are often losing value in real terms, it’s vital that people understand the power of long-term, diversified investing,” said Mark Burges Watson, co-founder of Kaldi.

“Even very small, regular contributions compound dramatically over time. The numbers speak for themselves,” he said.

The figures also show the value of investing over a longer period of time.

In the best-case scenario with 11.49 per cent annual returns, investing over 20 years would lead to an end pot of £78,180.31, and over 40 years it would be £766,018.58.

The longer the money is invested, the more opportunities there are for someone’s cash to compound and grow.

The figures calculated by Kaldi assume the money is held in a stocks and shares ISA – so not tax is owed on the gains – and takes into account fees of 0.15 per cent

It says the 7.57 per cent and 11.49 per cent range of performance was based on the previous performance of Vanguard LifeStrategy’s 100 per cent Acc fund, though this fund could see different returns in the future.

Funds allow investors to put their money into a range of different stocks and shares at once, meaning they are less reliant on individual companies to do well on the stock market.