PPS For Professionals

Article Name
The Free Stokvel

Tue, 23/07/2019 - 08:42

By: Bongane Myanga, Financial Adviser at PPS Financial Advisory


Stokvels have become the ultimate means for saving among many working adults in South Africa. Stokvels are found in many places: your work office, among church ladies, and even men are starting to use stokvels as a means to save. Although reasons for saving differ, the method remains the same. Members contribute a monthly or weekly fixed amount of money into a savings account, allowing participants to build towards lump sum savings for any household or lifestyle needs.


Stokvels have become the ultimate means for saving among many working adults in South Africa. According to research done by Nedbank, more than 11 million South Africans are members of stokvels and a total of R44 billion is collectively saved in 820 000 stokvels in South Africa. Stokvels make it easy to save as part of a collective, regardless of financial status as amounts are agreed upon within the group.


If appropriately managed, stokvels have the potential to help grow South Africa’s economy by using existing savings accounts to grow personal wealth. According to market research company African Response, 41% of stokvels are banked while only 5% are focused on investment savings. If banked correctly, stokvels could bring more South Africans into the formal financial services sector by giving them access to other savings, investment and protection offerings.


While stokvels have proven to work for many South Africans, however there is room to evolve and serve members better by exposing them to investment and financial management specialists. By using a bank account, it allows the members to track deposits and withdrawals, accurately reflect balances and interest earned and distribution of funds to members can be done directly into their bank accounts, which removes the risks associated with carrying large amounts cash among other things.


It is important to note that stokvels are not the only option if you want to save. Many financial institutions offer a variety of savings products.

PPS was created as a mutual organisation, operating similarly to a stokvel where graduate professionals formed a membership to build, protect and invest their contributions for their health and retirement. As a mutual organisation, members share in the profits of the organisation, through the unique offering of the PPS Profit-Share Account. They participate automatically in this scheme, just by paying their PPS premiums, without having to contribute a monthly or weekly fixed amount of money into the account.


While traditional stokvels work on a shorter pay-out time period, the PPS Profit-Share Account helps you grow your wealth over the long term so that benefits from the various products you participate in are accumulated for tax-free access at retirement.


The government encourages saving by offering tax benefits on certain investments; this opportunity for growth may be overlooked by stokvels. It’s therefore important that when deciding which savings or investment to use, you remember to consider tax-efficient solutions like tax-free savings accounts.


It’s important to remember that all profit that PPS makes is distributed to members into their Profit-Share Account, and any claims that you make over the lifetime of your membership does not affect what is allocated to your Profit-Share Account.


Don’t be afraid to ask for help. An accredited financial adviser can give you the right start by helping you unlock the long-term value you want to get from your savings.

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