How much is satel­lite TV re­ally cost­ing you?

CityPress - - Tenders - MAYA FISHER-FRENCH busi­ness@city­

When ac­tu­ary Vi­nesh Ma­haraj was con­sid­er­ing whether to change his DStv sub­scrip­tion, he did what all maths nerds do – he drew up a spread­sheet to see how much DStv would cost him over the next 40 years.

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.

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