In a series on how to make good financial investments, we answer what is a stokvel and how you can contribute to one in SA.
defines it as the following. “It is a type of credit union in which a group of people enter into an agreement to contribute a fixed amount of money to a common pool weekly.”, they are a great way to invest without spending much money. Essentially, you make small contributions and the pooled funds are distributed equally among everybody according to a predetermined schedule.
There can be stokvels for just about anything. Some experts say you can and should even create a stokvel amongst your friends so you can rely on each other for financial support when times get tough. However, these are the most common stokvel support systems in South Africa.The most basic form of stokvel, members contribute a fixed amount of money to a common pool. This can happen weekly, fortnightly or monthly. From there, members receive the lump sum on a rotational basis.
Buying property is incredibly expensive. This stokvel makes it more accessible for those who wouldn’t ordinarily be able to afford property. Stokvel funds are used to invest in the purchase of property. Whether it be residential, commercial or industrial.The purpose of this is to provide support to members of the fund who have lost a loved one. This will include the purchase of the coffin, funeral arrangements, as well as financial support to the family.
Stokvels are an informal, truly South African institution. They are offered by various groups in your local community. Speak to someone you know and trust to verify if they are reliable.Unfortunately, due to this informal nature, NASASA warns that they can sometimes be unreliable, unsecure and fraudulent.
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