If you struggle to save each month, or find yourself regularly dipping into your savings, it may be a good idea to team up with people who want to save. As a member of a savings club, you commit to making regular contributions and are accountable to the other members. This can help to create a regular savings habit and get rid of the excuses that stand between you and your savings goals.
Traditionally, most savings clubs keep their members’ contributions in cash or deposit them into a bank account. The downside is that traditional bank accounts generally don’t earn enough interest to beat inflation, and the value of your money decreases over time.
Many stokvels are unaware that there are other options available in the form of investment products, such as unit trusts, which allow you to grow your money and earn returns that beat inflation in the long run.
Unit trusts provide savings club members with a number of benefits, including exposure to different types of assets and flexibility. Savings clubs can access their money in a unit trust investment at any time, there are no fixed or minimum investment periods, and you won’t pay any penalties when you withdraw. However, we encourage investors to take a long-term view and avoid making unnecessary withdrawals. This gives investors the chance to enjoy the benefits of compound interest, which is earning interest today on the interest your investment generated yesterday.