It is becoming increasingly important for stokvels to open a bank account in which to keep members' hard-earned money safe and secure, and to benefit from compound interest on savings.
There will always be a place for traditional stokvels that help members with their basic needs, Riaan Appelgrein, the senior manager of customer financial solutions at Standard Bank, says. But times are changing and more and more stokvel members are realising that by making use of the banking products and options available to them today, they can benefit in a number of ways. All it takes is a bit of research.
Appelgrein says that most banks offer stokvel accounts that start paying interest on balances from as little as R100. These accounts are designed to receive the individual contributions from members – members can deposit their contributions directly into the account, which it makes it much safer than collecting the money at meetings and then keeping 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 these accounts to investment accounts, which offer better interest rates.
“When members pay their money into a bank account, they all benefit because, generally, the higher the balance in the account, the higher the interest rate. If the money is not withdrawn and contributions continue, the magic of compound interest ensures further and faster growth.”
Having a bank account also brings another advantage to stokvels that want to invest in longer term investment options: banks have financial planners available in most branches who can advise them.
Appelgrein adds that banking offers other benefits and opportunities for stokvels, such as:
- It is easier to keep track of deposits and withdrawals in an account;
- Statements accurately reflect balances and interest earned, which makes reconciliation easier;
- The distribution of funds to members can be done directly into their bank accounts, which removes the risks associated with carrying large amounts cash;
- It provides an opportunity to learn more about the various banking products available not only to the stokvel, but also to individuals; and
- Because of the legislation that governs Banks, there is no safer place to store your money.
“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 what you have been missing out on,” Appelgrein says.