Is chits 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 chit fund is the best in India?

List of 12 Best Chit Fund Companies & Platforms in India

• The Money Club.
• Government of Kerala Backed Chitty.
• Shriram Chits.
• Mysore Sales International.
• Purasawalkam Santhatha Sanga Nidhi Limited.
• Margadarsi Chit Funds.
• Guru Nanak Chit Fund.
• Gielle Investments Ltd.

Are chit funds safe to invest in?

This process repeats through the tenure of the chit fund. No TDS, but the interest earned is taxable. Generally non-taxable but must be declared. It is safer to invest with a bank which ensures your money is safe and guarantees you a fixed return. In the case of chit funds, you must have knowledge about how it functions.

What is the difference between chit funds and recurring deposits?

There are Government-run and registered chit funds that are safe to invest in. On the other hand, recurring deposits are a much safer investment. The returns are fixed and guaranteed at the end of the tenure. But both investments have their pros and cons. Let’s take a look into the differences between the two options.

How does the ABC chit fund work?

The ABC Chit Fund Company runs the chit fund business from past 10 years. Assume it starts a new chit, from April 2017. The new chit is open for 20 people, with a maximum contribution of Rs.1000 per month for 20 months. The subscribers of this chit, pay the monthly subscription amount to the chit fund company, also known as agent/foreman.

What is dividend in chit chit?

So, in the 2nd month, every subscriber of the chit has to pay only Rs.750. This way, bids are invited every month for 20 consecutive months, and the chit amount is given to the lowest bidder, till every subscriber gets the chit amount once. The profit derived is distributed equally, and is called as the dividend.