Cash Club: Property investment is better together

Njabulo NsibandeCash Club, Latest

ETF weightingIf you’ve been following my Cash Club blog, you will know that I’m a big fan of stokvels. Growing up stokvels were, and still are, a part of township culture. The stokvel industry includes burial societies, loan shark stokvels and umshayelwano (saving by borrowing from the next member), and it’s estimated to be worth around R7bn a year. With so much money being contributed towards a stokvel, one would assume there would be some wealth building in the townships. But if you’ve been to kasi that’s far from it.

Basically, this R7bn is accumulated and then spent, or at least most of it. It’s not effectively invested for long-term growth, and therefore, not benefitting from compounding

I took a page from Stealthy’s book and ran some numbers to see how a property stokvel will enable more financial growth over a longer period. And in a “perfect” residential property market scenario, the numbers definitely add up. 

Say 10 of my friends each contributed R2,000 monthly, increasing their contribution with 5% every year for 10 years, the calculation would be as follows: 

R2,000*10*12 = R240,000 collected in year one

R2,100*10*12= R252,000 collected in year two, etc. 

At the end of the second year, we would be able to buy property worth about R500,000 in cash, debt-free.

Assuming we get a monthly rental income of R5,000, 20% of the income (i.e. R1,000) will go towards maintenance, meaning we would pocket R4,000. I like to think of this as two new money baby members in our team – in order words, compounding is starting to work its magic. 

Repeating this process means adding a new property of more or less the same value every two years, and eventually every year. At the end of the 13th year, the group would have accumulated 10 properties, despite contributing only for 10 years. When to start drawing dividends from the rental income would entirely up to the group.  What I found interesting is the compounding effect over time.

Bellow illustrates the net asset value and total contributions for the year and accumulative total contribution:

And this is what the table looks like as a graph:

The power of compounding is illustrated clearly. 

When you think about it, the financial industry is a group of giant stokvels. From listed companies to investments funds ETFs and unit trusts. This again illustrates how far a group can go if they go together. 

I personally think to invest with a group of friends with a long-term view is the best way to invest in buy-to-let property. Essentially every member would have bought property worth about R500,000 with just a little over R300,000. Or one can continue this investment journey and take a small percentage, distribute as dividends and build long-term generational wealth.

We are definitely more powerful as a group than as individuals.


Njabulo Kelvin Nsibande

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.

Follow Njabulo’s journey here every month. You can also follow his trading journey by listening to his Village Trader podcast.

Find him on Twitter: @njabulo_goje.



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