He assumed an annual 8% price escalation on his DStv Premium subscription. What he found was that in premiums alone, he would spend around R2.3 million on DStv over the next 40 years.
That is a lot of money, but then he took it a step further and asked: What if I invested my premium each month instead?
Assuming a relatively modest 10% per annum growth on the monthly investment over the next 40 years, the amount came to a whopping R10.7 million.
One does need, however, to take inflation into account and the fact that R10 million in 2057 will not be worth what R10 million is today – but even if you used an inflation-adjusted number, in today’s value that investment would be worth R3.8 million – that is a long way to providing for retirement.
A similar calculation found that a DStv Compact subscription over 40 years would cost just over R1 million and if invested would provide around R1.7 million in today’s value.
This does not necessarily mean you must cancel your DStv, but it does highlight two things:
. It is easier to provide for a secure retirement than we realise if we just make different decisions today; and
. There is an opportunity cost to spending, because everything we spend today is a lost opportunity of more money in the future.
I guess the question we all need to ask when we spend and not save is this: Is what I am spending now worth double? Because that is the opportunity you have lost over just 20 years.