Use stokvel to create wealth

PLAN: YOUR CHILDREN AND THEIR CHILDREN WILL THANK YOU - AND YOU DON'T HAVE TO BE RICH

- Ina Opperman

If you thought creating generational wealth is just for really rich people, think again.

You can use your stokvel to create generational wealth and your children and their children will thank you.

Palesa Lengolo, product manager of Absa Personal and Private Banking and co-founder of the Absa Stokvel Awards, says creating generational wealth requires the discipline to save consistently and the insight to invest wisely.

"Even small amounts set aside over the long term can improve the financial wellbeing of multiple generations. On paper, these principles may seem straightforward to apply but in a South African context, generational wealth creation is challenging.

"Due to the country's underperforming economy, rising consumer inflation, existing debt and financial hardship, many South Africans are struggling to cover daily essentials with their disposable income, such as food and utilities."

She points out that consequently, South Africa's household saving rate decreased to -1,20% at the beginning of the year. Compared to the global average of 10%, South Africa has one of the worst savings rates in the world.

However, Lengolo says, the global savings rate is calculated with national accounting standards-based global practices set by international organisations, such as the World Bank.

"While a good indicator of SA households' formalised savings, these statistics exclude a unique and inherently South African savings and investment tradition that is deeply embedded in our history and culture: stokvels."