Cash Club: Investment Club update

In 2017 I convinced a group of friends to start an investment club. It wasn’t without challenges in the beginning. We started as a group of seven, which quickly reduced to five and then three. We’ve been three people since.

I had been invested in ETFs for a few months when I wanted to start an investment club. I was also invited to join a “umshayelwano”- a kind of stokvel where members rotate payments every month. This essentially gives each member an interest-free loan or savings. To me, this is great way to save and be accountable. But I had an issue with the interest-free savings. I was better off just putting that money in the bank. At the time, my focus was to save for the future.

I figured if we could do the same thing, but invest in the stock market, we would be better off over the long term. I shared my idea with a group of friends who shared the same view. We started the investment club and committed to save R500pm and increase our contribution by 10% pa for a five-year period. We would stop the contributions after five years, but stay invested.

We invested:

R500pm in 2018
R550pm in 2019
R610pm in 2020 (cont.)

We saved the money in our bank account, until our monthly interest was higher than our monthly fee. We wanted to prevent our cash from being eaten away by fees, leaving us with 100% of our money. We always wanted to put our money in the market.

At the time of writing, we have a diversified portfolio comprising of:

Cash: 15.6%
Coreshares S&P Global Property ETF: 14.5%
Satrix World ETF: 23.1%
Satrix Emerging Market ETF: 18.2%
Satrix 40 ETF: 19.7%
Absa Traci ETF: 4.4%
The Purple Group: 4.4%

Over two and a half years, our portfolio accumulated 12%. The best performer is The Purple Group (up 30%) and the worst performer Coreshares Global Property ETF (down 0.08%). To me, our biggest success is not portfolio returns, but our commitment to save consistently every month. The second big win, perhaps of more significance, is that all our members have since opened TFSA accounts and have invested in their own personal portfolio. This was one of our goals: to remove the fear of the markets by going in together.

Since we started we have collectively invested R45,500 and our portfolio value is R51,000. We will remain invested for the long term.

Njabulo Nsibande is a Just One Lap user-turned-contributor and a founding member of an investment club. His “Cash Club” blog details his experiences balancing the financial obligations of a young parent with his investment aspirations.