Stokvels are joint saving schemes where membership is generally by invitation. There is generally a high level of trust among members, while members also make a defined monthly contribution. Pooled amounts are made available to each stokvel member at a certain period.
What are the advantages and disadvantages of Stokvels?
One of the positives of being part of a stokvel is that they can be set up informally and they are not legal entities.
Individuals who are part of a stokvel can perform its activities outside of interference from the government.
They also promote social functions. Members who have joined often enjoy spending time together and socialising.
The costs of running a stokvel are quite low.
They may include savings, insurance or investment benefits. So the type of stokvel isn’t only limited to grocery savings or birthday celebrations, but could provide assistance even when you may be in need of a loan.
Contributions don’t always have to be monetary, so individuals can contribute in other ways too.
Joining a stokvel encourages saving behaviour. You may be able to develop better saving habits as a result of joining a stokvel.
Compliance rates are high, so even though stokvels are not legal entities, members generally adhere to a set of rules that are kept in place by members.
When considering the advantages and disadvantages of stokvels, you should keep in mind that this may include penalisation for defaulting. This could tarnish your reputation within the stokvel and you might be regarded as unreliable.
Scammers also often run pyramid schemes that are disguised as stokvels. If you aren’t aware of how stokvels are run, you could end up falling prey to scammers.
Before joining a stokvel, it’s important to plan ahead. You should also have a budget. Do the necessary research into the other members who are part of the stokvel.