A Stocks and Shares ISA is a brilliant way to build a second income stream to supplement the State Pension. The best time to start investing is always the same: right here, right now. That’s because the longer money is left in the stock market, the more time it has to compound and grow.

Even relatively small sums can build up to something impressive, given time. So how does that work in practice?

Let’s take the example of an investor who is 30 and wants to start building meaningful retirement savings of their own. Money is tight at this age, but investing a little is better than doing nothing at all. Aged 30, they’re probably looking at a retirement age of 68. That allows 38 years for their contributions to roll up free of tax.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Can I really get rich with a fiver a day?

Let’s say they can afford to put away a modest £5 a day, which works out as £152 a month, or £1,825 a year. Let’s also assume they increase that by 5% a year to keep one step ahead of inflation. My final assumption is an average compound return of 8% a year from a spread of FTSE 100 stocks, with all dividends reinvested. By age 68, they could have £804,155. Not a bad return from a fiver a day.

Now let’s say the portfolio yields 5%, and the investor takes that as income while leaving the underlying capital to grow. That would give them an annual passive income of £40,208 a year. Which is stunning. Of course, there are no guarantees when investing. That portfolio could deliver less than 8% a year. Or significantly more.

The FTSE 100 has been volatile lately, but I can see plenty of shares worth considering today. Insurer and asset manager Aviva (LSE: AV) has been one of the most impressive all-round stocks on the index lately, delivering both share price growth and dividend income. The Aviva share price is up more than 20% over the last year, and 60% over five. All dividends are on top. The yield has topped 7% at times.

Even after that strong share price performance, which typically shrinks the yield, it still offers a chunky 6.1% yield today. Amanda Blanc has done a good job since being made CEO in 2020, streamlining and sharpening the business. She’s has also benefited from higher interest rates, which revived annuity sales.

Should I worry about volatility?

After such a strong run, the shares could slow. Aviva’s price-to-earnings ratio has climbed above 23, although with earnings expected to keep climbing, the forward P/E is a modest 12.4. Blanc now has the challenge of integrating the recent £3.7bn acquisition of Direct Line. Deals of this size carry execution risk. Profits and revenues also depend on the wider economy, and we still don’t know how things will go in Iran.

Even so, Aviva remains worth considering as part of a broader portfolio. All shares have their ups and downs, but short-term volatility is the price investors pay for the superior long-term returns from equites. Which, as my sums show, can build life-changing sums for the cost of a daily cup of posh coffee.