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Looking for a way to save? Consider a stokvel…

by , 30 October 2015

If you're looking for a way to save that's unique to South Africa, you have to consider a stokvel.

So what is a stokvel? How do they work? And how can you use one to save?

Read on to find out more…

What is a stokvel?

A stokvel is a club consisting of 12 or more people where each member contributes a fixed amount of money on a regular basis, explains Wikipedia. Its origins date back to when English settlers “used them as a way to trade livestock at cattle auctions”.

Nowadays, the term stokvel is used to describe group saving and investment,

How a stokvel works

Stokvels are essentially co-operative savings schemes where groups of no less than 12 “create a pool of money,” says MoneyShop. Members can access the money for a variety of different reasons that the members decide.

This includes funerals, groceries and investments, adds MoneyShop.

Now around 5% of stokvels are used to invest in shares or for entrepreneurial activities, says Fin24. For an investment stokvel, the average contribution “is between R300 and R500 a month”.

How you can use a stokvel

It’s easy to set up a stokvel or join an existing one is they have room for more members. All stokvels should be registered with the National Stokvels Association of South Africa.

They are easy to manage as all of the big banks offer stokvel accounts. Just shop around to see what accounts suits your stokvel best in terms of transactions and interest rates.

Whilst stokvels are a good idea to consider for savings, they’re probably not best for high value investments as there are always worries about safekeeping, Elizabeth Lwanga-Naziri of the South African Savings Institute tells Fin24.

So there you have it. Why you should consider a stokvel if you’re looking for a way to save.

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Looking for a way to save? Consider a stokvel…
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