Simple way to turn your daily coffee into $1 million

Anyone who gets a daily coffee could also become a millionaire with one simple step – but the trick is to start today.

Most people think you need a lot of money to get started investing, but the reality is that you probably don’t need nearly as much as you think to get some pretty epic results.

For example, if you’re 25 today and started investing with just $6 daily, you could grow an investment portfolio worth $1,086,160 by age 65 – based only on the average sharemarket return and without any stock picking or speculation.

That’s a $1m investment portfolio for the cost of a coffee a day.

In this example, you invest a total of $87,600 and let time and the power of compound interest do the rest of the work for you.

Now I get that $6 a day isn’t nothing, particularly in the current cost of living crisis – but it’s a figure that should be achievable for most people if you really put your mind to it.

Most people know they should be investing, but they don’t invest nearly as much as they could or should – you think about investing but end up stuck on the fence.

But this fence sitting can be seriously costly.

If instead of investing $6 daily from age 25, instead you get stuck in the inaction trap and need to play catch up later on, you have to do a lot more work to end up in the same position.

For example, investing for half the time (20 years compared to 40), you’d need to invest $49 per day to reach the same million dollar investment portfolio. This approach sees you investing a total of $357,700, or $270,100 more than in the previous example.

While a 25 year old can invest the price of a coffee per day, someone older will need to invest a lot more to get the same results. Picture: iStock

The difference between the two is huge, and apart from the fact that investing $49 daily is a lot harder than $6 per day, the total amount invested is a lot more.

It’s not easy, but there are three things you can do to drastically improve your chances of investing success.

Get started now

Typically, people take longer than they should between first thinking about investing and actually putting it into action. This is easy to do, because you want to invest, then you start doing research around the best way to go about it, and this is where it can start getting complicated …

Because there are so many different options around what you could do and so much noise online about the best approach it’s easy to end up confused. Combine this with the fear of making a costly mistake, and it’s easy to get stuck on the fence.

What most people don’t realise is that when you’re just getting started investing, how much you invest will have a much bigger impact than which investments you choose. Particularly if you’re investing small regular amounts like the $6 daily mentioned above, what investments you choose won’t actually make that much difference to your bottom line.

Mid adult handsome man working at home using laptop, while his daughter doing her homework in background in living room

That being said, you do want to avoid choosing investments that fail. There are a lot of different ways to be right when it comes to investing, but the statistics show that index funds perform better than other options more than 94 per cent of the time, so if you do go with an index fund, more than nine out of ten times you’re going to end up better off.

Never be forced to sell

Once you have your investments growing for you and building momentum, the only real key to getting seriously epic results is letting your investments continue to grow and build for the long term. The one thing that can get in the way of this outcome is if you’re forced to sell your investments, and if this happens at the wrong time you can end up losing money.

You can make sure you’re never forced to sell your investments by having enough cash on hand to cover all the expenses you want or need to do. If you have enough money to cover all your spending, you’ll be totally confident that when you invest it can stay invested forever and a day.

Being clear on your income and expenses and having a solid budget is important for more than just making your day to day easy, it’s a critical element of your investment plan.

Make it automatic

The more work you have to do, and the more manual your investing is, the higher the chances are that something will get in the way. When you invest, you should aim to make your investing as automated as possible.

Set up your investing so it takes up as little of your time as possible. Picture: iStock

The good news is that there are heaps of investment accounts that allow you automate your investing, where they will simply debit your bank account for a set amount of money on a set day each week, then do the rest of the work to get your money invested.

When you take this approach, you set your default outcome to investing success, and it means you’ll need to actively do something to not get the results you wanted. It sounds super simple, but simple really is effective here.

The wrap

Investing is the key to not being forced to work forever, and the sooner you start, and the more consistent you are, the better results you’ll get. Further, the earlier you get started on this path, the less you’ll have to save (sacrifice) to get to where you want to be.

It can be confusing and complicated if you let it be, but ultimately there are some small things you can do to seriously improve your chances of success.

Ben Nash is a finance expert commentator, financial adviser and founder of Pivot Wealth. Ben is the creator of the Smart Money Accelerator https://bit.ly/3mgI0Wt program that helps people build a second income investing faster.

Ben is also the Author of the brand new book, ‘Replace your salary by Investing’ and the host of the Mo Money podcast, and runs regular free online money education events, you can check out all the details and book your place here

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.