Should your stokvel save or invest — and what's the difference?

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Stokvels are an important part of the fabric of SA’s culture: more than 11-million of us belong to more than 800,000 of these traditional groups. 

According to Tyvision Media — a company that empowers stokvels and burial societies to make informed decisions and reach their financial goals — one of the most common misunderstandings for stokvel members is the difference between saving and investing.

Saving refers to the act of having a particular financial goal, and then putting money aside towards achieving that goal.

For example: stokvel A has 10 members who each contribute R100 monthly. They deposit R1,000 per month in a bank account from January to December with the goal of giving each member R1,200 at the end of the year. 

Investing, on the other hand, refers to the act of committing money to earn a return (profit). Simply put: it’s when you “buy” something today that will generate value and be worth more at a later date.

For example: stokvel B invests its money in shares (buys shares) with the hope that the price of these shares will appreciate over a period of time. For instance, if they buy shares at R100 per share in 2024, they hope the share price will increase and they’ll be worth R160 each by 2029.