Every December, thousands of South African stokvels do the same thing: they pay out the year's savings and start fresh in January. That's exactly how a savings stokvel is meant to work.
But more groups now want their money to do more than sit in a savings account for a year. They want to buy shares. They want a piece of the JSE, not just bank interest. And the first question they hit trips up almost every group that asks it: are we still a stokvel, or have we actually become an investment club?
Getting this right matters. It changes how you run your group, what tax you owe, and the actual steps you take to put money into the market.
The Difference Has Nothing To Do With Size
A ten-member stokvel that buys ETFs is an investment club. A two-hundred-member burial society is not, no matter how much money moves through its account.
The real difference is simple: what happens to the money once it's in?
- A savings stokvel (sometimes called a rotational stokvel) takes money in and pays it straight back out again, usually within a year.
- An investment club takes money in and turns it into something that grows (shares, ETFs, unit trusts) and holds onto it for years.
Ask yourself one question: in December, do you give everyone back roughly what they put in? Then you're running a savings stokvel. Or is the plan to buy and hold for five years and split the growth? Then you're running an investment club, whatever you call yourselves in the WhatsApp group name. We cover the tricky parts of running one, like what happens when members join or leave partway through, in how to start an investment club.
Are Investment Clubs Regulated?
This is the question that worries people most, so let's answer it plainly: no, your investment club almost certainly does not need to register with anyone.
South Africa does regulate large pooled investment funds, think unit trusts, under a law called CISCA (the Collective Investment Schemes Control Act). But CISCA is aimed at funds that are open to the public: strangers, invited to invest by a fund manager they've never met.
Your investment club isn't that. It's a small group of friends, family, or colleagues who already know each other, pooling their own money for their own benefit. The law has a specific exception for exactly this kind of private arrangement (it's officially described as a "restricted circle of individuals with a common interest"). Because of that exception, your club doesn't need to register with the Financial Sector Conduct Authority (FSCA), and it doesn't need a CISCA or FAIS licence.
There is a line you shouldn't cross, though. If your club starts advertising for new members outside your existing circle, or takes money from strangers, it starts to look like a public investment fund rather than a private one, and the legal protection falls away.
This is also why the platforms that serve investment clubs, covered below, ask for a fixed, named list of members from day one, rather than letting anyone join.
How To Actually Buy JSE Shares As A Group
Knowing where you stand legally is one thing. Actually buying a share is another. There are two ways to do it, and which one fits depends on how big and ambitious your club is.
Path 1: Keep It Informal, Open A Group Brokerage Account
Most investment clubs don't need to register a company to start buying shares. South African stokvels and investment clubs already exist in law as what's called a universitas: in plain terms, an informal group that's allowed to own things and open a bank account together, without being a registered company. Several brokers have built account types specifically for this.
EasyEquities is the platform most South African clubs use. To open a group account, you'll typically need:
- At least two members
- Your group's constitution (the document where you wrote down your rules)
- A signed resolution from all members, naming one person who's allowed to give instructions
- Proof of your group's address (less than 3 months old)
- A recent bank statement for your group's account
- For each member: an ID or passport, plus proof of address
You send the completed application to EasyEquities' new accounts team, and the account opens in your club's name, not any one person's name.
Once it's open, the club can buy JSE-listed ETFs (like the Satrix or CoreShares range), unit trusts, and individual shares. Whoever you named as the signatory places the trades on the group's behalf.
This is the right starting point for almost every investment club: no company to register, no extra tax return, and a structure that matches what your club already legally is.
Path 2: Register As A Company First
Some clubs eventually outgrow this. If you start taking on outside investors, want members to be able to sell their stake easily, or your portfolio gets large enough that real legal protection matters, it's time to register a Pty Ltd (a private company) before opening the brokerage account. The company, not the informal group, then owns the account and the shares.
We compare all the legal structures available to your group, including the costs and tax differences, in Stokvel, Trust, Or Pty Ltd? Read that before your club grows large enough to need it.
What To Actually Buy
This article is about how to pool money and buy shares, not what to buy. We've already written a full guide to the investment options available to South African groups (money market funds, fixed deposits, unit trusts, ETFs, shares, and property) in Where Should Your Stokvel Invest Its Money?
The short version, if your club has a five-year-plus horizon: a diversified ETF is usually a safer starting point than picking individual shares yourselves. You can build toward that later, once the club has more experience.
Don't Skip The Governance Before The First Trade
Most investment clubs don't fail because of a bad investment. They fail because nobody wrote down who owns what.
Before your first contribution goes into the brokerage account, agree on three things and put them in your constitution:
- How will you track ownership? Equal shares only work if everyone contributes exactly the same amount, every time, forever. Real life doesn't work that way. That's why most successful clubs switch to a unit-based system instead: every contribution buys "units" at the current price, so members who joined earlier are rewarded for it, and members who join later aren't unfairly penalised. We walk through a full worked example in our investment club guide.
- Who can place a trade? One person acting alone, or does it need a vote?
- How does someone leave? Can they force the club to sell investments to pay them out, or do they have to sell their units to the other members first?
We've written a starting template that covers all of this (contributions, decisions, and what happens when someone leaves) in our Scheme Rules Template. Adapt the Investment Club section at the end of it before you open any brokerage account.
Tax: The Short Version
Buying shares as a group means dealing with dividends, and eventually, tax on any profit you make when you sell. Dividends tax (20%) is taken off automatically before the money reaches your account. Profit on selling shares, and the yearly tax-free interest allowance, are worked out per member rather than for the club as a whole, in most cases.
We cover this in full, including when SARS might expect your club itself to register as a taxpayer, in Stokvels And Tax
The Checklist
Before you call yourselves an investment club and open a brokerage account, make sure you've:
- Agreed your group's goal is to grow money, not rotate it, and written that into your constitution
- Confirmed your membership is a closed, named list, not open to the public
- Decided: stay informal and open a group brokerage account, or register a company first
- Written down how you'll track contributions if they're not always equal
- Agreed who can place a trade, and what needs a vote
- Agreed what happens when someone wants to leave
- Gathered the documents your chosen platform asks for
References:
- Collective Investment Schemes Control Act 45 of 2002 (South African Government)
- Setting Up An Account For Stokvels, Investment Clubs, Or Others (EasyEquities)
- Collective Investment Schemes, Exchange Traded Funds & Hedge Funds (Webber Wentzel)
- How To Start An Investing Stokvel (Moneyweb)
- Spreading The Risk With Investment Clubs (JustMoney)