Put the rate cut to work in stokvels

Last week’s rate cut by the Reserve Bank 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 save for additional goals in the longer-term.

Communities, families and friend circles have benefited from saving with simple stokvel schemes like kid’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.

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.

As we start the year, re-examine your stokvel and identify the areas where your savings will have the most impact, such as additional payments to the bond or January back-to-school spending.

Look at placing your savings in an interest-bearing account as it will ensure 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 disciplin of savings among your stokvel group and help you achieve your saving goals.

Seeing the interest returns will help motivate your group to continue saving towards their stokvel goal.

Have regular reviews and catchup meetings (one per month minimum), 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.

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 hardearned savings.

Key to the success of your stokvel is finding a group with the same S-M-A-R-T (specific; measurable; achievable; realistic; time-based) goals and formally starting a stokvel with a constitution, clearly stated objectives, a stokvel account and signatories to act on behalf of the group.

Sifiso Nkosi is growth head for FNB Cash Investments