Swapping a daily coffee for investing could result in a pension savings pot worth more than £2million, new analysis suggests.
Figures from investment cashback app Kaldi show that investing £3 each day from age 20 to 70 could grow to between £560,698 and £2,291,845.
The calculations assume total contributions of £54,750 over 50 years.
The findings follow the Chancellor’s recent decision to reduce the Cash ISA allowance to £12,000.
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The Treasury said the change is intended to encourage more people to put their savings into UK equities instead of holding cash. Kaldi based its figures on historical performance of the Vanguard LifeStrategy 100 per cent Acc fund.
Estimated annual returns in the analysis range from 7.57 per cent to 11.49 per cent. Kaldi said this means daily contributions could multiply between 10 and 42 times over half a century depending on market conditions.
The company said the data shows the potential effect of compound growth over long periods.
Even the lowest projection of £560,698 represents a substantial increase compared with the total amount invested.
Skipping a daily coffee and investing instead could build a retirement pot exceeding £2million
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Kaldi said the £3 daily sum could be generated through cashback earned from routine shopping for users of its free app. The firm's co-founder, Mark Burges Watson, said it is important for people to understand long-term investment growth.
"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."
He added: "Even very small, regular contributions compound dramatically over time".
Industry analysts say the UK is facing increasing retirement pressures due to rising living costs, longer life expectancy and low real returns on cash. Kaldi said low-risk investment products can help savers build long-term funds while maintaining stability.
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The company said inflation continues to erode the value of savings held in cash ISAs
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The company said inflation continues to erode the value of savings held in cash ISAs. Kaldi said its cashback model aims to support people who find it difficult to set aside spare income.
The app is free to download and does not charge subscription fees. Users earn cashback at more than 130 UK retailers, including major supermarkets.
The cashback can be automatically directed into a GIA, ISA or JISA.
Kaldi said this allows users to build investments without making separate contributions themselves.
Options include money market funds and index funds
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The app provides access to low-cost funds from providers including Vanguard, Fidelity and HSBC. Options include money market funds and index funds.
Kaldi said the platform is designed to simplify the investment process for users.
Mr Burges Watson said: "Low-risk options like money market funds, which can sit inside a stocks and shares ISA, give savers a chance to earn real returns and protect their wealth - while still maintaining a measure of stability".
He added that the app is "seamless, intuitive, and inclusive designed to help users build long-term wealth without friction or financial jargon".
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