Stokvels have been used in South Africa for over a century and are still used regularly today. Stokvels may have begun as unorganized savings groups to aid with food and funeral expenses, but today they support members in saving for a wide range of needs, including education, family emergencies, and vacations. With so many investment alternatives available, it’s important to consider if a bank account or a stokvel are preferable for saving money for your financial goals.
There isn’t a one size fits all answer to this question because it is dependent on a variety of factors, such as your personal saving style and motivations.
According to 1Life, there are however questions to ask yourself so that you can make an informed decision.
1. Are you a disciplined saver?
You may become a more disciplined saver if you share an investment objective. Numerous stokvel members agree, and studies have proven that being a member of a stokvel increases your sense of discipline since you don’t want to let the other members down.
Being a part of a stokvel typically prevents you from using the funds for ad hoc purchases, increasing your chances of success. Many stokvels have bank accounts, but accessing the money isn’t as simple as it is when you have your own account because there will normally be at least two signatories.
2. Do you trust your stokvel members?
Unfortunately, South Africa has had a number of financial scandals, from minor one-man frauds that separate you from your money forever to widespread banking fraud.
In order to have a successful stokvel, you must have faith in your teammates. Stokvels have a strong social component where members gather, share stories, ideas, and have social evenings getting to know each other in addition to developing a disciplined saving habit. This makes it simple to identify the members of your stokvel as well as where and how to contact them and their families.
3. Have you got a common goal?
Putting your money in a pool may make sense if you have a similar objective and are willing to save in accordance with the stokvel’s regulations. By pooling your funds, you can avoid paying bank or investment fees and possibly invest in things that are beyond of reach for smaller investors, such real estate or livestock.
When you save in a stokvel, you are a part of a community of people who are all saving money for the same financial objective, which is the primary distinction between saving in a stokvel and saving in a bank account. If you keep your money in a bank account, it belongs to you personally, and only you have the authority to spend the funds. While there are many advantages to saving in stokvels, it is crucial to have mutual trust and the same objectives.
Also see: A boy helps woman in need with his pocket money
