Save R7,00 a day starting at age 20, invest this at 8%, and at age 65 you will have a million rand in the bank. It sounds extraordinary, but it's true.

It sounds so easy. Cut out the junk food and you'll save far more than that. Forget the flashy car which still only gets you from point A to B. And the expensive insurance that goes with it. Quit smoking. Cut down on booze. Take sandwiches to work. Forget designer clothes. Ditch all those health pills which you won't need if you eat healthily. Invest this money and become a multi-millionaire.

So - why isn't everyone rich beyond imagination by the time they reach age 65? What the above calculation fails to point out is that if you had started investing R 7,00 a day, forty-five years ago, (assuming the inflation rate over the years was 8%), that R7,00 would be equivalent to R220 a day now. Or, to put it another way, R1 million in 45 years' time won't be worth all that much. How much in today's terms? Take a deep breath! Only R31 328 - if inflation continues at 8%.

What's the implication of this? It does not mean that long term savings are not worthwhile. They are. And you can't blame the banks and insurance companies for inflation. But people need to be realistic. By and large, the facts show that over the long term, whether in the UK , America or South Africa , most investments will only give you a couple of percentage points above the inflation rate - no matter what the inflation rate is.

In other words, if you want to build a substantial nest egg - there's no escaping reality - you have to save more rather than less. If every time you receive a salary increase, you set aside a third of your increase for the future, you will be on the right track. Most people don't. That's why there are so few real millionaires.