Stokvels, the answer to many questions

Growing up, I would marvel at this idea that you could accumulate Shoprite stamps at R5 each and then use a booklet to pay for your December groceries.

It was something that truly made a difference in our home. As a semi-adult in finance, I have a newfound appreciation of all the principles this teaches. At one point, my mother used to belong to a stokvel that “invested” in these stamps.

Stokvels: ‘Tokenisation long before blockchain’

If you think about it, South Africans have been perfecting fractional contributions before regulations – and doing so unassisted. Stokvels were tokenisation long before blockchain told us what it is.

They were a tool that helped us in the hard times and gave us all something to build up and look forward to. Stokvels allowed for minimal contributions on a consistent basis, enabling us to achieve better cash flow management as households.

The power of collective saving and unified investing goals is epitomised in stokvels.

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Limitless possibilities

Here lies a tool that is understood by South Africans but remains grossly underutilised. We could be doing so much more with our stokvels.

Groceries, meat, holidays, handbags, asset purchases, you can stokvel anything! Guys like Stokfella and Property Stokvels (who are doing great things) are just scraping the surface of the limitless possibilities of stokvels.

In truth, there should be a stokvel for everything. So why isn’t there?

It could be because very few of us enjoy admin, and even fewer of us can agree on a common investment goal. But maybe we don’t have to – maybe we just need to agree on the best way to deploy the capital.

Go pro?

This is where you bring in the big guns. Some people wake up with the sole objective of optimising capital allocations, so why not let them do all the heavy lifting?

It also helps that you can hold someone accountable; someone beyond Rakgadi Mama and Oom Bennie, who may or may not dip into the cookie jar from time to time. Someone regulated.

We need to let go of this idea that we need to own 100% of everything to make it worthwhile. You can very easily enjoy the economic benefits of taking part without needing to have all the control.

If you had R1 million in equity to deploy, would you rather own 100% of your own spaza shop or a 0.5% stake in Woolworths?

Think about it from a risk perspective – why put all your eggs in one basket when you can have a few baskets shared with aligned investors? You may not make as much money from a single place, but you are also not going to lose as much if one basket goes wrong.

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So where could stokvels be putting their money once they’ve been set up?

Stokvels should be looking at low-risk, alpha-seeking allocations. In simple terms, find a good private equity partner who will aim to grow the value of your funds without taking the big risks and promising you 1000% at a time. This isn’t advice, it’s simply how I would respond to the question if my mother’s stokvel asked it of me today.

As we wrap up this introductory series of thoughts, I hope this one thing remains with each of you if nothing else – consider your investments from a different perspective. Use a different lens to identify alternative opportunities.

You might surprise yourself when you realise what’s been right in front of you this whole time.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.

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