In my first Your Money column, I am writing on the importance of having stokvels that can truly empower you.
The tips offered are aimed to encourage us to invest savings in projects that are likely to generate an income, rather than promote a culture of consumerism.
Consumerism is when people buy products solely for consumption purposes, without any intention to profit from their purchases.
This means there is a difference between a person who goes to the Joburg Fresh Produce Market to buy vegetables and fruit in bulk for selling purposes, instead of someone who makes a similar acquisition for a once-off event such as a funeral, wedding or party.
This applies to stokvels which have been around for decades in South Africa, but are generally used to feed the country's consumerist culture.
A study by Old Mutual shows that a large number of stokvels are created to buy groceries, festive season shopping, furniture and appliances, pay for school fees, funerals and debts.
However, a stokvel that businessman Kibiti Ntshumayelo initiated together with nine other people in 2014, is focused on generating income for them. This is the story that I would like to share with you today on the possibilities of how to use a stokvel to empower yourself financially.
The stokvel, registered as Dukamanhla Investment, buys and rents out properties.
Ntshumayelo told Sowetan the stokvel was created with a 15-year plan to assist him and his partners to generate enough income and to allow them to retire comfortably.
"Our task is to buy properties, and there is a property management company that manages the properties for us by collecting rent," he said.
"We started by popping out R5000 a person a month, which accumulates to R50000.
"The first property we bought for cash, when we reached R500000," he said.
He said each year the monthly contributions get increased by R1000, which means this year they are paying R8000.
Ntshumayelo said in their first year, they acquired their first property and in the second they bought three properties.
"In 2016, we bought another three, and this year we have just bought one.
"We want to buy in places where there is competitive rental income and which are close to working areas.
"In 2015 we bought properties in Bloemfontein, which were cheaper than in Gauteng and aimed at students," he said.
He added that the long-term goal is to generate enough rental income that will replace the monthly contributions and have the properties pay for themselves.
"Once we have done that we will change the focus and invest in something else, which could include buying company shares and trading on the JSE, buying and developing land.
"The uniqueness of our approach is that we don't share profits every year, and we plough back the money into the initiative, but we are able to use the money to go on holiday," he said.
How stokvels can be used to create investment opportunities
In my first Your Money column, I am writing on the importance of having stokvels that can truly empower you.
The tips offered are aimed to encourage us to invest savings in projects that are likely to generate an income, rather than promote a culture of consumerism.
Consumerism is when people buy products solely for consumption purposes, without any intention to profit from their purchases.
This means there is a difference between a person who goes to the Joburg Fresh Produce Market to buy vegetables and fruit in bulk for selling purposes, instead of someone who makes a similar acquisition for a once-off event such as a funeral, wedding or party.
This applies to stokvels which have been around for decades in South Africa, but are generally used to feed the country's consumerist culture.
A study by Old Mutual shows that a large number of stokvels are created to buy groceries, festive season shopping, furniture and appliances, pay for school fees, funerals and debts.
However, a stokvel that businessman Kibiti Ntshumayelo initiated together with nine other people in 2014, is focused on generating income for them. This is the story that I would like to share with you today on the possibilities of how to use a stokvel to empower yourself financially.
The stokvel, registered as Dukamanhla Investment, buys and rents out properties.
Ntshumayelo told Sowetan the stokvel was created with a 15-year plan to assist him and his partners to generate enough income and to allow them to retire comfortably.
"Our task is to buy properties, and there is a property management company that manages the properties for us by collecting rent," he said.
"We started by popping out R5000 a person a month, which accumulates to R50000.
"The first property we bought for cash, when we reached R500000," he said.
He said each year the monthly contributions get increased by R1000, which means this year they are paying R8000.
Ntshumayelo said in their first year, they acquired their first property and in the second they bought three properties.
"In 2016, we bought another three, and this year we have just bought one.
"We want to buy in places where there is competitive rental income and which are close to working areas.
"In 2015 we bought properties in Bloemfontein, which were cheaper than in Gauteng and aimed at students," he said.
He added that the long-term goal is to generate enough rental income that will replace the monthly contributions and have the properties pay for themselves.
"Once we have done that we will change the focus and invest in something else, which could include buying company shares and trading on the JSE, buying and developing land.
"The uniqueness of our approach is that we don't share profits every year, and we plough back the money into the initiative, but we are able to use the money to go on holiday," he said.
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