Stokvels are nothing new, they have been part of our society for decades. They are a great way to save up for things that you want. Most of us grew up with parents that were a member of some stokvel. What exactly is a stokvel and how does it work? Does it have any limitations, that’s what we will uncover on this article.
What is the purpose of a Stokvel?
The main purpose of a Stokvel is to encourage people to save towards a common goal. A lot of people are not disciplined enough to save money on their own, there are always things that need money. A Stokvel is a great way to save money, while making sure that you get what you saved for.
Most often you get exactly what you put in on a Stokvel, the amount of money that you put in the Stokvel is exactly what you get, either through cash or groceries or even property.
There are a lot of different Stokvels, there are property stokvels, grocery Stokvels, alcohol Stokvels and cash Stokvels. You can open a Stokvel for just about anything. The pay out from a Stokvel differs from Stokvel to Stokvel, property Stokvel may pay out by building a house for each member, members would have to wait for their turn. A grocery Stokvel is usually set aside for a far-off date like December, all grocery is bought in bulk and divided among members.
What are the advantages of a Stokvel?
Stokvels can be easily set up without any legal requirements or government interference. This informal style of setting up means that there are often no start-up costs to opening a Stokvel.
Stokvels encourage a saving behaviour, which can translate to other areas of life. Members of a Stokvel are usually very compliant and rarely miss a payment. Money from the Stokvel may be put in an interest earning savings account. This helps the Stokvel to stay above inflation.
What are the disadvantages of a Stokvel?
The main disadvantage of joining a Stokvel is that you may lose some or all of your money if you fail to adhere to the rules. Some Stokvels have a no refund policy and you stand a chance to lose your money should you quit.
Some stokvels that take a long time to bear fruits often have some disadvantages. This is commonly seen in property Stokvels where some members can wait up to 9 years before receiving their properties. The main drawback is the waiting period and that building material and labour will have risen substantially in 9 years.
Is a Stokvel a legal entity?
No, a Stokvel is not a legal entity, Stokvels are part of the informal sector. A Stokvel is not required to have any legal documents.
How is a Stokvel regulated?
A Stokvel is regulated by its members, since most Stokvels are informal. The government has no interference on the operations of a Stokvel. However, it has been looking to making regulations that will govern Stokvels.
Is a Stokvel a good investment?
A stokvel is a good investment, however, it’s more of a savings vehicle than an investment. The value that you get from a Stokvel is usually exactly what you put in or just slightly more. This makes it an effective savings vehicle. However, there are much better investments that earn much better returns if that’s what you seek.
Conclusion
There are a lot of scams that are pretending to be Stokvels, always do some research before joining a Stokvel. Do you have any thoughts or questions? Comment below.
