Stokvels have been around for quite a while. You may have heard of the name but might not know much about what they are or how they work. Did you know that Stokvels are a legally approved manner for a group of individuals with a common goal to meet regularly and contribute an agreed amount to achieve a common goal? They could be saving towards a variety of things, from groceries, savings, ‘Janu-worry’ fees that would help with school fees for kids and stationery in January. Most Stokvels run annually, ending at the beginning of December – in time for the Festive Season. Example: A group of 10 people with a common problem of not being able to save enough individually to cover expenses in January for their children going back to school can form a Stokvel. A ‘Stokvel account’ would be opened at the bank, and the group would choose 2 to 3 people for bookkeeping, making deposits and reporting to the group. The Stokvel would run for a year, with each member contributing an agreed minimum amount or more monthly. At the end of 12 months, each member would receive their savings and their share of the interest earned from the group’s total savings. Over time we have noticed other kinds of Stokvels coming to light; from appliance stokvels, property stokvels and even money ‘rotational’ stokvels (Um’hholiswane). Stokvels can be a great way of saving money as a group, especially with the interest they can earn! It’s a wonderful way for individuals to socialise and build a sense of community. However, it does have a few risks one has to ensure they look out for – such as:
- Individuals not contributing regularly as expected
- Mismanagement of funds
- Peer pressure
- Scams and dishonest individuals
- Do your research on it, its members & when it was started etc.
- Commit to an amount you CAN afford
- Have an understanding of where your money is saved & your expected earnings at the end of the year
Definitions:
Appliance Stokvels – Groups that save up money to buy equipment such as gas stoves and cooking appliances Property Stokvels – A group of people who pool their finances to buy bigger and more expensive properties and benefit from compound interest. Rotational Stokvels (Um’hholiswane) – These are the simplest form of a Stokvel, where members contribute a set amount to a shared pool each week or month. *Disclaimer: Any information within this article is not intended, nor does it constitute financial, tax, legal, investment, or other advice. Whilst every care has been taken to confirm the accuracy of the information presented and to describe generally accepted practices; neither the authors, editors or publishers can be responsible for errors or omissions or for any consequences from application of the information given.
