The R1-million stokvel story
ADVICE: HOW TO RUN A SUCCESSFUL SAVINGS AND INVESTMENT VEHICLE
Stokvels and investment clubs are the same thing, but an investment club’s driven by an excess mindset. The minute you adopt an excess mindset, you look at money differently, says the SIT founder.
Astokvel born from a desire to boost financial literacy now boasts investment holdings of R1 million in just over three years. Lazola Belle founded the Joburg-based Social Invest and Trade club (SIT) with 11 friends in late 2013.
“I got a call from a friend who needed money to take his daughter to the doctor. I didn’t have the money and I was irritated…. At that time, we’d been working for corporates for around eight years,” he said.
No other friends had the money either. “…We were professionals; we knew how to make money but didn’t know the principles of money.”
Belle and his friends realised they needed to learn to manage money. So they changed the conversation at social gatherings. That eventually led to each person contributing R1 000 and collectively buying into two JSE index trackers in November 2013.
The group didn’t have a mechanism to choose investments and merely picked exchange-traded funds (ETFs) as they were low cost and mitigated risk. He says they were forced to acquire knowledge.
On the JSE he says: “We took our money and put it there and because we didn’t want to lose it, we were forced to acquire the knowledge.”
SIT has since grown its portfolio of investments to over R1 million, although Belle estimates the club’s lifetime impact, which includes payouts to ex-club members, is R2 million.
The group’s greatest return has been education.
“Six businesses have emerged from our core group. Some of them have failed but that’s okay, they wouldn’t have emerged if we didn’t change the conversation. The more we talk, the more progressive we become.”
SIT plans to register as a co-operative financial institution (CFI): a deposit-taking financial institution owned and controlled by members. New chair Kgauhelo Moeca, who takes over from Belle, is mandated to grow the club’s holdings to R10 million in the next five years. Its goal is to hit R100 million by 2030.
Under the CFI structure, the group would be allowed to take on 200 members. SIT currently has 20 members, each contributing R1 331 per month.
Belle said the key, in part, is psychology.
“Stokvels are consumption vehicles. They tend to die as inflation eats away at the money in the bank or they are often depleted at the end of every year. The mindset is very desperate, that’s why if you start a stokvel today with that ’40s mindset, you won’t be very successful”.
His tips for running a successful savings and investment vehicle include setting a start date and committing; drafting a binding constitution upfront and sticking to it, making room for revisions; and not depleting the fund on an annual basis.
Rather take a long-term view of at least 10 years.