Stokvels have become quite a difficult question to define, considering the recent growth and diversification of stokvels. The traditional stokvel is basically a group savings scheme where members come together once a month and contribute a portion of their income. Once a year, members are paid out the total sum of their contributions throughout the year.

Stokvels have diversified dramatically from the traditional stokvel. Stokvels now range from burial stokvels to business stokvels. Stokvels are for the benefit of everyone and anyone can start a stokvel, regardless of what background you come from. Stokvels are becoming especially popular amongst South Africa’s higher earning individuals as they too see the great advantages that group savings can bring.

One of the fasting growing type of stokvel is the investment stokvel. It works the same as a stokvel but rather than members being paid out their contributions, members decide as a group how to invest their funds, whether its gaining interest in the bank, buying property or investing on the JSE. The benefit of investing as a group is that you unlock much higher interest rates as well as the ability to pay properties off much quicker. In addition to these benefits, the risk of investing is pooled between the groups, which make investing a lot safer.

Stokvels by nature are run on trust and this has posed a threat to the sustainability of stokvels. A lot of stokvels have begun to experience crime, pyramid schemes and other general fraud. This has led to people leaving stokvels to rather save by themselves, which also rarely occurs. A recent solution to these problems is an online platform called Yethu, which is a tracking system for stokvels that notifies all members of changes in the bank account. It allows members to interact with their leader and to have a full visual view of the bank account. It also allows the leader to better manage the stokvel and ultimately helps the stokvel to increase its returns.

Although stokvels are experiencing these problems, it seems like the technological rate of change is occurring at a faster rate and systems like Yethu can assists in improving the lifestyle of people involved in stokvels. Stokvels are a huge thing for South Africans, especially considering 11 million people are part of stokvels in South Africa. Stokvels are fantastic and encourage a savings culture that South Africa so desperately needs but we need to ensure that as a country we all play our part in ensuring their existence continues on into the future.

For more information on stokvels and to compare interest rates between banks, check out our website at www.yethu.co.za

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