Stokvels can boost their buying power simply by using a financial institution

It is becoming increasingly important for Stokvels to consider having a bank account with a reputable financial institution to keep their hard earned money safe and secure, but also to improve the buying power of their money through earning interest on those monies.

There will always be a place for traditional Stokvels that help members with their basic needs, says Riaan Appelgrein, Senior Manager: Customer Financial Solutions at Standard Bank. But, says Mr Appelgrein, times are changing and there are now more and more Stokvel members that have realised that by utilising the wide variety of value adding banking products and options available to Stokvels today, they are able to significantly improve their buying power and deliver better value to members. All it takes is a bit of research. Most Banks offer Stokvel accounts that start paying interest on balances from as little as R 100. These accounts are designed to receive the individual contributions from members – members can deposit their contributions directly to this account which it makes it much safer than collecting the money at meetings and then keep a large amount either in someone’s house or waiting for the Bank to open to make a deposit. They are also able to link many other interest bearing Investment accounts such as Money Market, Notice Deposit and Fixed Deposit accounts.

“When members all pay their money into a bank account, they all benefit because, generally, the higher the balance in the account, the higher the interest rate. The longer the money stays in the account the more interest earned. After a set time, say a year, the total amount saved means that the Stokvel has accumulated interest that is added to the capital amount providing additional buying power and value for members. For example, if members of a Stokvel contribute R3 000 per month, after 12 months they would have accumulated capital of R36 000. At a rate of say 5% per annum they would have earned an additional R 1800 just in interest which now takes their total available balance to R 37,800. If the money is not withdrawn and contributions continue, the magic of compound interest would ensure further and faster growth.”

Having a bank account also brings another great advantage to Stokvels that want to invest in longer term investment options. Banks have Certified Financial Planners available in most Branches who can advise Stokvels on ways the many options available.

In addition, Mr. Appelgrein adds that Banking offers other benefits and opportunities for Stokvels such as:

“If you are part a Stokvel, Savings Group or Burial Society, take time out to speak to your Bank about the various options available to you. You might be surprised on what you have been missing out on” concludes Mr. Appelgrein