Stokvel to Investment club

[kokzn]

In 2011, myself and 6 friends started a stokvel type club. We contribute R300 a month into a stokvel account. The main purpose of the funds at the time was to subsidize various weekend vacations we do. We usually do a weekend away roughly every 3 months.

Not all of the 7 of us were disciplined enough with monthly contribution, and eventually at the end of May we decided to resolve the club. We paid back each member all their capital contributions minus whatever amount we used to subsidize our vacations over the past 3 years.

Out of the 7, only 4 of us were 100% with contributions, so we decided to keep clubbing together.
We decided to increase our monthly payments to R500, and we currently have around R40k sitting in a normal stokvel savings account.

We want to start proper investing, and hopefully even trading.
With a R40k initial lump-sum, and R2k per month. What are our options?

 

[Dubes]

If you're digging into it every 3 months you're going to need a degree of accessibility and liquidity.

My recommendation would be accessing a collective investment on one of the investment platforms out there. Your contributions are more than sufficient. You could split the funds between slightly more aggressive equity funds, for the portion you feel you won't need access to over a number of years, and some access to "income funds" for the amounts you'd want short term access to.

The fund make up all depends on your investment time horizon and appetite for risk though.

 

[kokzn]

@Dubes, we will not be using it to subsidize vacations anymore, just for investment purposes only.
Thanks for your comments.

 

[Dubes]

My personal opinion then would be to no longer pool.... rather each start your own investment as you then have total control and don't end up in arguments about who controls it and what happens if one dies etc.

Most collective investments can be accessed for a few hundred rand a month so the amount should not be an issue.

 

[noob_saibot]

I partly agree with Dube,

Although what I would do (if that R500 is a discretionary and very tiny part of your income) would be to keep using the stokvel for holidays (everybody needs them) but instead of draining the capital, use the money you get on returns to take holidays.

Even without spending the returns on holidays/other utility-satisfying activities, investing the money is a great way to beat inflation.

As far as a solution for (eventually) breaking the stokvel goes, I would suggest a maturity date on the stokvel itself (in case you want to use it as a collective investment vehicle). Maturity can either be at a certain capital + returns sum or after a certain number of years (10 maybe?).

Having the collective scheme will also enable the group to invest more broadly and perhaps attempt some riskier asset classes for better returns.

PS. I am not a financial adviser and anything mentioned by me should not be considered proper financial advice. I recommend that you speak to a qualified financial adviser when considering options concerning collective investments and investing in general. (Clearing myself legally from any obligations :erm: )