Why fees matter

Most people aren’t aware of the power of compound interest – the effect of interest earned on interest previously earned. Most people do know, however, that they pay fees on their investments and savings. 

How do the two concepts tie together?

We think this says it best:

“A regular saver who reduces the charges in their retirement account from 2.5% of assets each year to 0.5% of assets would receive a benefit 60% greater at retirement after 40 years.”

National Treasury’s paper on the Charges in South African Retirement Funds, July 2013.                          

This means that if the sum of your annual investment management fees and administration fees were 2% lower than you are currently paying, you could retire with 60% more in benefits. So instead of R1 million, you would retire with R1.6 million.

It is important to add all your fees up when considering what fees you are paying, as they can have a hugely detrimental effect on the value of your savings over time.

At Sygnia, we are determined to reduce the cost of saving for all South Africans.

That’s why we charge an all-in fee of 0.4% per annum (including VAT) for our Sygnia Skeleton unit trusts. There are no switching, transacting or withdrawal penalties. There are no hidden fees, either.

And if you want to invest in one of our Skeleton unit trusts via a retirement annuity, a living annuity or a preservation fund, the administration fee is nil, as is the savings product fee.

The graph below shows the impact on your financial future of a simple switch of investments from an expensive product to a Sygnia Skeleton unit trust.