Family Stokvels Invest the pooled money in formal bank accounts or financial services. The money is paid out according to the needs of the family, but generally the funds are used for buying land or cars, for business investments, or for deposits on bank loans. Investment Group Invests money in order to benefit from the interest. When an investment pays out, the money is split but, in some cases, part of it will be kept back for reinvestment. Party Stokvels Arranges street or jazz parties, often with live entertainment. An entrance fee is charged, and food and drink is sold. Members then share in the profits. Borrowing Stokvels Which loans money at high monthly interest rates (20–50%) to members and sub-members from its regular pool money. Burial societies A burial society provides "informal insurance" to help families with the costs of a funeral in the event of a death. Burial societies also provide practical support for the family during the preparations; for example, by helping to prepare food. This is similar to a stokvel, in that monthly fees are collected. However, the main difference is that periodical payouts are not made and new member can only benefit after a three-month waiting period. Burial societies are invariably intended for poorer and less educated people. Burial societies can be seen as the product of urban living and appear to have evolved in order to aid migrants from the rural areas who find themselves facing problems in a strange and hostile environment. In South Africa, the disadvantaged, and the poorer and less educated classes, have historically been black and coloured people. The burial societies help alleviate the expenses incurred when burying a loved one. It therefore comes as no surprise to find that burial societies tend to be more popular in these communities. Benefits The peer pressure encourages members to save. Pooled money can earn better returns, at a lower cost. Banks offer higher interest rates on bigger amounts and banking costs are lowered (or in some cases, free) if the amount is large enough. Sense of community and socialising. Stokvel members traditionally meet regularly and make an occasion of the meetings. Educational. Some stokvels operate like investment clubs and invest in the stock exchange or companies. Members do their homework, deliberate about which shares or companies to invest in and make investment decisions. Knowing when a windfall will be received makes it