Sandile asks: I have few friends and we each collect R1 000 a month, like a stokvel, but we need to change our method, we need to invest this money instead of giving it to one person per month. We need to invest as from February until November. At the moment there are five of us; in other words we will be putting in R5 000 per month. Please advise on how to invest in this kind of situation.
Maya replies: As this is a short-term investment your best option is a bank account. There are many bank accounts that provide for collective savings, but the important thing to remember is that the longer you can leave the money in the account, the higher the interest rates. If you can opt for a fixed deposit or notice account you will receive about 4% more interest than a call account.
Nedbank
Nedbank’s offering is probably the most attractive as it does not have any fees. Club Account, Money-24 and NedTerm all offer no fees and attractive rates — and they’re available to groups of people.
The products require three signatories to open the account, of which 2 signatories are required to withdrawal or place notice, but Nedbank says it is flexible and the group is able to choose their requirements for transacting provided they meet or exceed the pre-mentioned minimums. All signatories will require verification in terms of FICA (ID and proof of residence), irrespective of the product choice.
- Club Account is operated by means of a book, and withdrawals/deposits can be done at any time at the branch.
- Money-24 is a money market account requiring a minimum balance of R10 000. Additional deposits can be done at the branch subject to a minimum of R1 000, and one day’s notice is required to take funds out (also a minimum of R1 000). The minimum balance is not a hard rule, it just means you will not receive interest until the R10 000 minimum is reached.
- NedTerm sounds like the best option for you. It is a notice deposit with a minimum deposit of R1 000, additional deposits of R100, no minimum withdrawal amount, which is also subject to one day’s notice.
Both Money-24 and NedTerm offer the best interest rates with a R10 000 deposit earning about 6,5% (although this will fluctuate with interest rates).
Absa
The Absa Club account is a collective saving for an “informal body” with immediate access to funds. This “informal body” may take the form of a society, savings club, church group, social club, sports club, stokvels, burial societies etc. A minimum of two signatories is required to open an account. A minimum of two signatories is required for withdrawals from the account.
Minimum opening balance: R500
Maximum Balance: Unlimited
Deposit: A minimum monthly deposit of R250 is required.
Interest: Interest is fairly low. Currently 2,7% on R10 000
Fees: If the balance is below R10 000, the client will pay an administration fee.
Monthly Lucky Draws on Absa Club accounts: The monthly lucky draws are introduced to encourage higher balances on the Absa Club account and cash prizes totalling R10 000 per month can be won.
If you do not need to access your funds immediately you can opt for Absa’s 32-Day Notice Deposit or Fixed Deposit. For example, a six-month fixed deposit is currently paying 6,5%.
What you need to open a collective account
Valid South African identity documents (i.e. green bar-coded ID books) may be accepted as the identification medium.
Proof of residential address.
A copy of the society’s constitution. If one does not exist in writing, a written declaration (obtained in the branch) is required. The declaration must be furnished by all the mandated officials authorised to establish a business relationship on behalf of the entity.