The Ya Rona Club shares its experience on turning your stokvel into a successful investment club
Twelve years ago, the Ya Rona Club transformed itself from an informal savings club, which facilitated a social gathering of friends, to a long-term, sustainable investment club.
“We reached a point where we did not want a stokvel where we just bought alcohol. We wanted it to be sustainable. Soon, more people started to join, (people) who had the same kind of thinking,” says Chipane Kgaphola, chairperson of Ya Rona, which currently has 11 members, all of whom are professional males who either have their own businesses or hold senior positions.
In 2001, the club reformed to provide both a short-term and long-term savings element.
“Although we decided we did not want to be a traditional burial society or stokvel, some members were attached to the stokvel idea so we split the contributions into two,” says Kgaphola, who explains that each member contributes R1 100 a month to the club.
The amount is added to the club’s share portfolio, but in January each year, those who wish to draw on their short-term savings are entitled to withdraw up to R6 600 (equivalent to R550 a month) – this is usually used to pay school fees.
Those members who do not need the funds simply leave them to grow in the investment fund.
Kgaphola says initially it was a challenge to convince members to invest in shares. “We had to educate members about shares. There were fears about how safe their money was. We also had to shift the mind-set that we wanted to grow the money, not just pay it out.”
Those members who stayed and bought into the club’s vision have been rewarded. Over 12 years, the share portfolio has grown to nearly R1 million.
“I don’t know many clubs that have assets of nearly a million rand,” says Kgaphola.
Ya Rona has what Kgaphola describes as a “watertight” constitution. “A constitution sets the ground rules so you don’t operate on a whim, which could lead to disputes”.
Ultimately, the constitution is the guiding document for all operational matters and is proactively amended to address new realities. Kgaphola says the constitution has clear guidelines on how money gets collected and contributed, and how the funds are invested. It deals with auditing and the distribution of savings, and how dividends from shares are reinvested.
The constitution addresses issues such as when a member does not pay or wishes to leave the club, when a new member joins or a former member rejoins, and what happens when a member dies.
The club has strict rules and attendance of the monthly meeting is compulsory. “People must contribute to promotion of the club. You have to have active members,” says Kgaphola, who says members have to have paid before they attend the meeting or face a 10% penalty.
Each member takes turns at holding the meeting at their home, where issues are discussed. Investment ideas are also discussed. Kgaphola says, for example, at the moment the club is investigating buying property.
The club also incorporates an element of entertainment, where the annual family holiday is discussed. “We all go away together once a year with our spouses. The money is not from the club, but it is organised at those meetings.”
The bank account
The bank account has three signatories. The signatories must report back at each monthly meeting to confirm transfers have been made. They also have an internal auditor who goes through the club’s spreadsheets to confirm that what is on the spreadsheet is reflected in the bank account.
Members used to bring cash to meetings. Now they transfer the money electronically, which saves on bank charges.
The club has employed the services of a stockbroker, who has a mandate to invest the club’s money.
“The broker selects a few shares and gives us a choice. We agree on what shares we will invest in, so the club maintains the right to say yes or no to a share.”
Apart from the share portfolio, the club members also invest in BEE share schemes in their personal capacity.
Clockwise: Chipane Kgaphola, Molehe Selekisho, Tukisang Senne, Moalosi Thebehali, Tebogo Tabane, Synock Matobako, Wewe Mosweu, Barney Moatshe and Dumi Motloung of the Ya Rona Club. Picture: Muntu Vilakazi
The future generation
Ya Rona recently formed a junior club for its members’ children that will be launched in December when the children are on school holiday.
The junior club is designed along the same lines as the main club and will receive guidance from the main club’s executive committee.
“We realised we started late ourselves, so we have now brought our children together in a club,” says Kgaphola.
Not only is it a way to create wealth for the future generation, but it is an opportunity to teach the youth about money and saving for goals.
The members’ children range in age from one year to 25 years. Those children who are already working will contribute themselves and be part of the decision-making process, while the parents will contribute on behalf of the younger children.
In recognising the need to provide financial education to as many young people as possible, the club has decided to open the junior club to any child who wishes to join, as long as they are prepared to adhere to the constitution.
Favoured by the youth
The number of youngsters using informal savings groups such as stokvels has increased significantly, according to Old Mutual Savings Monitor.
According to the respondents of the survey, 63% of people aged between 18 and 30 save through groups, compared with 50% for the main population.
Old Mutual estimates the stokvel industry to be worth R45 billion.
Research by African Response found that:
» There are 350 000 savings stokvels with a membership of 5.4 million people saving about R25.41 billion annually; and
» There are at least 38 000 investment stokvels, serving an estimated 1.7 million members investing R2.16 billion in different instruments, including savings accounts.
The average South African stokvel has 27 members, with each member contributing about R210 a month, while burial societies can have between 21 and 100 members, and typically have members paying R100 or less a month.
Powered by WPeMatico