Are chit funds a good investment?
Are chit funds a good investment?
Chit funds are not necessarily a bad investment. It has a bad reputation because it has been misused in the past to scam naive investors. There are Government-run and registered chit funds that are safe to invest in. On the other hand, recurring deposit are a much safer investment.
Which is better chit funds or mutual funds?
In the case of mutual funds, the money is invested in stocks/bonds. And chit funds use the money to lend it and the income generated is divided equally among all subscribers….Chit Funds Vs Mutual Funds.
| Chit Fund | Mutual Funds | |
|---|---|---|
| Principal guarantee | Principal is guaranteed | There is a risk of losing the principal amount |
Which is the best investment instrument?
Top 10 investment options
- Direct equity.
- Equity mutual funds.
- Debt mutual funds.
- National Pension System.
- Public Provident Fund (PPF)
- Bank fixed deposit (FD)
- Senior Citizens’ Saving Scheme (SCSS)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
What happens when no one is willing to take money from a chit fund?
If no one is willing to take the minimum sum, a reverse auction is conducted, where subscribers bid for lower amounts; they start from Rs 50,000, Rs 49,000, Rs 48,000, and so on. The person bidding the lowest sum gets the money.
What are the benefits of chit fund?
Chit Funds have the advantage both for serving a need and as an investment. Money can be readily drawn in an emergency or could be continued as an investment….Why Chit Fund
- Tax Free Dividend.
- Easy Accessibility.
- User-friendly service.
- Absence of latent cost.
- No Periodic interest hikes.
- Exit Options with nominal charges.
How does the chit fund work?
In a chit fund scheme, a group of people contribute periodically towards the chit value for a duration equal to the number of investors (members or subscribers). The amount collected is given to the person, who is either selected through a lucky draw (lottery system) or an auction.
Is Shriram chit fund safe?
Shriram Chits This is the largest chit fund in the country and probably a very safe one. Interestingly, it has almost 6,000 employees and also serves states like Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra. This is one of the oldest chit funds in India from the private sector.