Make the recent rate cut work for your stokvel

THE rate cut by the South African Reserve Bank (SARB) provides a bit of a relief to consumers and businesses. It provides consumers with the opportunity to look at how they can maximise their savings and stokvel investments to help them save for those additional goals in the longer-term.

Communities, families and friend circles have benefited from saving with simple stokvel schemes like children’s education, funerals, groceries and even savings stokvels for many years. “Given the tough economic outlook for South Africa the repo rate is likely to remain low for a while, which is an opportunity for stokvels to save more for a longer period to grow savings,” said Sifiso Nkosi, Growth Head of FNB Cash Investments.

“Stokvels continue to contribute to South Africa’s savings culture. It’s a great opportunity for like-minded individuals who, with a common purpose, look at saving together towards a common goal,” added Nkosi.

Nkosi said as the year starts, people should take a look at their stokvel and identify areas where savings will have the most impact like additional payments to the bond or January back-to-school spending.

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“Look at placing your savings in an interest-bearing account as it will ensure that the group’s money works for you and stretches further. In addition, to ensure that you save consistently, set up a scheduled transfer to make sure the money generated from the reduced repo rate is directed toward the identified stokvel goal. Creating this transfer will encourage a disciple of savings amongst your stokvel group and help you achieve your savings goals,” said Nkosi.

He said seeing the interest returns will help motivate your group to continue saving towards their stokvel goal. Nkosi added: “Have regular reviews and catchup meetings of around a minimum of one per month, which will ensure that your stokvel sees the progress of the savings. It’s important that the operations and setup of the stokvel is done correctly and in a transparent manner in order to safeguard the group from any negative experiences.”

Nkosi said you may think that these savings are big sacrifices, but these initial steps will benefit your group immensely. “However, caution must be taken to lessen the potential of members losing their hard-earned savings. Key to the success of your stokvel is finding a group with the same goals and formally starting a stokvel with a constitution, clearly stated objectives, stokvel account and signatories to act on behalf of the group,” concluded Nkosi.

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