People warn you against chit funds, but I’m here to tell you otherwise. 🫡
Chit funds is an age-old system in India, wherein a group of people (50 people) pool a defined sum (Rs 10,000) every month for a fixed period of months (50). Traditionally there are two types of investors in a chit fund, the person who goes with the intent of savings and the other with the intent of financing.
Chit funds take this pool of money and auction it off to the members, the members bid by placing discounts on the prize money the member with the lowest discount wins, if there is a draw on discount then the winner is selected by ways of a lottery; this difference is the savings for the nonwinning members.
But did you know that you can make a killer rate of return that is higher than FD rates given by banks through a chit fund?
The method is simple, apply for auction to win the award from the early months. You may not get the prize in the initial months due to competition but in the middle months due to lack of competition, you can win the prize and place it in an FD with the Chit fund themselves.
Chit fund FDs give 7-8% returns annually and couple that with the discount income from the auction you can make as far as 10% on your total investment.
⚠️Disclaimer: Always invest in a registered chit fund with a large chit company as there have been cases of misappropriation of money by unregistered chitty.
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#financewithsharan #chitfunds #fd #bank #moneysavingtips #savemoney
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