Guiding consumers since 2009

Making the most of your Stokvel’s money

By Jessica Anne Wood

Stokvels are a common informal savings tool used across South Africa. Communities pool their money together, and when a member needs funds, they are paid out a lump sum from the savings pool. However, this money is not always kept in a bank account. For this reason, Standard Bank is urging Stokvels to invest their money in bank accounts, to take advantage of the interest that the funds can earn.

“If not kept in a bank account, money often entrusted with a designated person in the group who might keep this money hidden somewhere in a safe in his/her home or elsewhere where they deem it to be safe. We are also aware that some Stokvels store money with retailers/wholesalers to redeem later for goods,” noted Standard Bank.

The benefits of a bank account

According to Standard Bank, Stokvels should consider utilising a bank account with a reputable financial institution to keep members’ money safe and secure. Riaan Appelgrein, senior manager for customer financial solutions at Standard Bank, noted that more Stokvel members are becoming increasingly aware of the benefits of using banking products and the value-adds that it can provide their Stokvel.

“They are able to significantly improve their buying power and deliver better value to members. All it takes is a bit of research. Most Banks offer Stokvel accounts that start paying interest on balances from as little as R100. These accounts are designed to receive the individual contributions from members – members can deposit their contributions directly to this account which makes it much safer than collecting the money at meetings and then keep a large amount either in someone’s house or waiting for the bank to open to make a deposit. They are also able to link many other interest bearing Investment accounts such as Money Market, Notice Deposit and Fixed Deposit accounts,” revealed Standard Bank.

Among the products that cater specifically to Stokvels are: First National Bank’s Stokvel Account and Standard Bank‘s Society Scheme Account, which caters to groups such as Stokvels, burial societies, and savings or investment clubs.

“When members all pay their money into a bank account, they all benefit because, generally, the higher the balance in the account, the higher the interest rate. The longer the money stays in the account the more interest earned. After a set time, say a year, the total amount saved means that the Stokvel has accumulated interest that is added to the capital amount providing additional buying power and value for members,” explained Appelgrein.

Appelgrein provided the following example to illustrate: If members of a Stokvel contribute R3 000 per month, after 12 months they would have accumulated capital of R36 000. At a rate of say 5% per annum they would have earned an additional R 1800 just in interest which now takes their total available balance to R 37 800. If the funds are not withdrawn, they will continue to grow thanks to compound interest.

Further benefits and opportunities that utilising a bank can offer Stokvels include:

  •          It is easier to keep track of deposits into an account and the money being taken out of an account.
  •          You can easily get access to statements that accurately reflect balances and interest earned which makes reconciliation much easier.
  •          Distribution of funds to members can be done directly into their bank accounts, which removes the risk associated with carrying large amounts cash.

 

 Handy tip: Need a bank account? You can compare account offerings on Justmoney.

Recent Articles

Featured New homeowner? Be aware of these extra expenses

You’ve overcome all the hurdles of buying a home. You’ve managed to pay your deposit and your closing payments, and now you’re a proud title deed holder. However, there are other expenses waiting around the corner. Are you prepared?

Your biggest credit conundrums – answered

Understanding your credit health is one of the most important factors in managing your finances. This is because it gives you insight into your debt, your borrowing ability, and your financial history. While many understand this, there are still many questions on how to do just that.

Avoid debt collectors, choose debt counselling

There are two things you can do when you are struggling to pay your debt. You can either let your creditors hand your debt over to debt collectors – or you can let debt counsellors help you deal with your debt.

Retail notes: easy investment option for new investors

Being a newbie in the world of investing can be challenging because you don’t know where and how to invest. With so many investment options, you could easily be befuddled. Justmoney looks at how retail notes can help you cut your teeth in the world of investing.   

Deals

Translux Student Discount

Price: Depends on destination
When: Daily
Where: Nationwide

Zimbali Senior Citizens Discount

Price: From R1342.00
When: Until 14 December 2019
Where: KwaZulu Natal

Free meal for kids at Mozambik Restaurant

Price: Free
When: Until 15 November 2019
Where: Johannesburg, Durban, Pretoria