The ideal stokvel account

A reader asks:

A few friends and I collect R1 000 a month like a stokvel, but we need to invest this money instead of giving it to one person a month. We want to invest from February until November. There are five of us, so we will be putting in R5 000 a month.
Please advise on how to invest this.

Maya Fisher-French replies:

Nedbank’s NedTerm looks like the best option. It has a high interest rate for relatively low amounts, no fees and provides for group savings. In terms of giving notice and withdrawing, it requires a minimum of three signatories. All signatories will require verification (ID and proof of residence) in terms of Fica regulations. Any person can deposit money into the account.

NedTerm is a notice deposit that requires a minimum deposit of R1 000 and a minimum of R100 for additional deposits. There is no minimum withdrawal amount, but withdrawals are subject to one day’s notice. Interest rates start at 7,15% for R1 000 and 7,45% for amounts of more than R10 000.

Other Nedbank options include the Club Account, which is operated by means of a book. Withdrawals and deposits (no minimum amount) can be made at any time at the branch. Interest rates are lower on this account, starting at 2,9% for R1 000 and 5,40% for amounts between R25 000 and R39 000.

Money-24 is a money market account requiring a minimum balance of R10 000. Additional deposits can be made at the branch. A minimum of R1 000 can be deposited or withdrawn and one day’s notice is required for withdrawal of funds. The rates are better at 7,30% for amounts of more than R10 000 and 8,78% for more than R20 000.

Absa has an Absa Club account for stokvel-type investments. It requires a minimum balance of R500 and an investment of R250 a month. For balances of less than R10 000 there is an administration fee. There are lucky draws with cash prizes for accounts with balances of R10 000 or more, but interest rates are not spectacular.

Bring money to SA cost-effectively

A reader asks:

I work overseas but live in South Africa. I earn a monthly salary in pounds sterling and deposit this into an account in South Africa. What is the most cost-effective way of doing this? At present I am paying very high banking fees.

Maya Fisher-French replies:

Having canvassed the banks, fees range from 0,35% (Absa) and 0,4% (Standard Bank) to 0,456% (Nedbank), with minimum charges of about R98 and maximum charges of about R550. As you are looking at the maximum fee, Standard Bank is the cheapest with a maximum fee of R475.

Absa suggests you bulk your transfers so that the break-even point of the R500 maximum fee is exceeded. It says the reason you find the process expensive could be because of charges by your British bank. Your bank in the United Kingdom will charge a fee and possibly a SWIFT fee when you apply for the transaction, which is over and above Absa’s fees. Absa suggests you find out whether your British bank holds an account with Absa. If it does, the flow of funds will be directly to Absa. If not, an intermediary bank (adding an additional fee) will be involved.

Nedbank says, apart from making a telegraphic transfer to South Africa, you could deposit a salary cheque at any Nedbank foreign exchange branch. The cost would be 0,399% compared to 0,456%, with a maximum fee of R452 and a handling fee of R33,50. But keep in mind that a clearance period applies to cheques. The clearing period might be longer with international cheques, which is not ideal for a salary payment.

Please send your questions to [email protected]

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