Friend with investment idea gathers 10 others with a vision of financial well-being
NextGen Stokvel capitalises on market inefficiencies
Capital One Partners (COP), which was established in 2019, is aimed at building wealth through investing in financial markets.
Also known as "The NextGen Stokvel" or "Stokvel 2.0", the organisation is registered as a private company and uses the stokvel vehicle to take advantage of unrealised capital gains and market inefficiencies.
“The central theme of our organisation is to improve our financial well-being through investing at high returns.
“Overtime, we actually started realising that we can bring more value to the community at large beyond ourselves,” said the stokvel’s co-founder Papaki Legodi.
Prior to the formation of [COP], Legodi developed an interest in financial markets. After spending much time researching and learning all he could about investments, he decided to gather 10 of his closest friends. Through the mutual vision of improved financial well-being, the stokvel was formed.
Since then, their membership has increased from 11 members to 23 and its currently worth an estimated R2.3m.
While wealth creation has been high on the list of objectives from the onset, the stokvel is also greatly committed to using the available skills and resources to drive financial literacy and investor education beyond its own members.
“Our mission is actually far greater than just lining our pockets. We also realised that, given our skill set and experience in the financial market, we can transfer this knowledge to the community,” said Legodi.
Because COP is registered as a private company, the contributions which members make on a monthly basis are directly translated into a percentage of ownership within the company. As such, membership also equates to being a shareholder.
“What you own depends on the contributions you make. We follow the same methodology as unit trusts. We evaluate the company, look at the number of shares issued to date and give you the asset value per share,” said Legodi.
The stokvel’s co-founder also stated that there is no limit to the amount which members can contribute. In the beginning, the set minimum contribution was R1,000. However, members now have the freedom to determine what they would like to contribute. The amount chosen by each member can also vary each month.
Additionally, Legodi said COP was very particular about the kind of people brought on board as members, and ultimately as shareholders of the company. Amongst the requirements are a basic understanding of investments and financial markets, a burning passion and a sense of alignment with the organisation’s goals.
“Much of the criteria is in-built onto the application forms. What we don’t want are people who have a trading mentality because that’s not what we do,” he added.
For Sibusiso Hlatswayo who is one of the stokvel’s founding members, his journey with COP has served as proof of the magic made possible by small yet consistent contributions.
“As a member, I can attest that it is indeed life-changing. It made me acknowledge the power of starting small and remaining consistent. The stokvel also got me into the habit of saving, which was previously scarce in my life,” he said.
Having known Legodi for many years, Hlatswayo felt safe to pursue the investment opportunity, which was being proposed, and to ultimately become a stokvel member and company shareholder.
“When he presented this idea to us, I bought into it because he is someone who understands a bit of the investment landscape.”
Like many organisations, the journey of COP has not been free from challenges. While there has been much growth both in membership and financial returns, some of the challenges include unanticipated passive membership, as well as the inability of financial institutions to accommodate some of their digital aspirations.
“Instead of fighting passive membership, we embrace it. The most active members are tasked with running the organisation, while continuously engaging the rest of the members in terms of what we do,” said Legodi.
Going forward, COP aims to grow further and to take advantage of the digital age in order to advance its operations. There are also prospects of investing in private companies, thereby backing young and local entrepreneurs while creating much needed jobs.
Before making the investment...
Investing on financial markets has great potential for lucrative returns. However, there is also a substantial level of possible risk. As such, it is crucial to take preparatory and precautionary measures before making your investment. According to COP, these are some of the things you need to consider before making your investment.
1. Know what is out there
As a person looking to invest in financial markets, it’s important to understand what is available out there. There are opportunity costs to investing. The mere fact that you have chosen to invest in one place and not the other also means there is potential of missing out on other opportunities. You are only able to maximise on great opportunities if you know what is out there.
2. Be informed
Knowledge goes a long way. Know the type of investment you are making, the growth prospects, as well as the risks involved. Do your research before venturing into any opportunities. After all, you will be parting with your hard-earned money.
3. Don’t let risk deter you unnecessarily
By nature, investments contain an element of risk. Be sure to acknowledge and consider the type of risks involved in any particular investment. Instead of staying away from all investments altogether, rather evaluate the risks involved and weigh them up against reasonable potential benefits.