Stokvels are often set up by groups of individuals who have come together with a common purpose.

Generally, the purpose is to find ways in which to alleviate some form of financial constraints that these individuals have experienced in the past or they want to plan for the future to achieve some sort of goals.

These goals vary from being able to supply their families with groceries during the festive season to being able to pay off school fees at the beginning of the year, or to even build a legacy for their families.

No matter how good the reason is for starting a stokvel, there can be challenges along the way. The very first thing is ensuring that the correct type of people are in the stokvel.

Now for most stokvels this is easy as it starts with a group of friends, but that in itself can pose a challenge because the key to a successful stokvel is the level of commitment to the group by the members. As a group of friends, you may want to include everyone but not everyone may have the same level of commitment to the group.

Commitment is very key to any investment club or stokvel because that is how they grow.

I have found that the best way to manage a stokvel is to ensure that it's not an informal set-up, but that there is a constitution which all members sign and sets out the guidelines for participation in that particular stokvel.

Another challenge that can be experienced by a stokvel is making the right decisions in terms of where the money should be kept or invested.

Being able to access information about investments that are easy to understand for people who may not be financially savvy is a challenge.

This is the main reason why the majority of stokvels hold their funds in low-interest-bearing bank accounts - it is primarily because members do not know of any other options for investments.

Keeping their funds in a bank account will be contrary to what the stokvel may want to achieve because of the low levels of interest being earned on the money. The solution to this challenge is for the stokvel to partner with a financial adviser.

Financial advisers can offer stokvel members information around various investment options and also give informal training on how investments work.

The knowledge that the stokvel members can gain from an adviser will help the group to make informed decisions around where their money should go and will also open up other avenues on what can be done with stokvel money.

Some people are sceptical about using financial advisers because they fear the adviser will take their hard-saved money or give them advice that they don't understand.

You can protect yourself by engaging a certified Financial Planner who is independednt and can provide an objective view plus answer questions about different products. In this way your stokvel can grow capital and achieve financial goals.