Mackay says that, for many of us, there are a million ways we could trim costs here and there to be able to save a little more for retirement. And most people would do it if only they knew how much of a difference a small regular investment makes if left to grow over the decades. It is usually a case of choosing between things on which we like to spend money and things we should spend money on - that classic struggle between short-term gratification and long-term security.
If savers were to consider how diverting, say, an additional R1000 or even R100 a month into a low-cost, long-term investment would grow, they would more easily be able to find that extra saving, says Mackay.
Compound interest, which Warren Buffett and Albert Einstein are both said to have described as “the eighth wonder of the world”, means that savings grow exponentially, creating a snowball effect where you earn growth on the growth, and so on, much like a snowball rolling down a hill, he says.
However, compounding works both ways, which means that fees can cut into your savings at an exponential rate too, Mackay says. The reality is that most South Africans don't even know what fees they are being charged.