Comparative Advantages of Investing in a Chit :

   Chits are the most remunerative of the many Financial Products that are available to an individual in the present days. It is observed that Chits generate 12% to 16% growth annually which is higher than any of the financial products offered by Banks, Insurance Companies and other Financial Institutions. People who opt for investment in Fixed Deposits regret their decision later, on realizing its lower returns. Rotating one’s funds in a Registered Chit Fund Company will generate 12 to 16% assured returns depending on the investors decision to encash the Chit.

   As in the case of opting for a particular Insurance Policy looking for an optimal gain, the vital issue in case of Chits is the selection of the Company for your Investment. In this scenario, Investments in a Chit Fund Company registered with the Registrar of Companies is as secure as investments in any Public Sector Banks. The Rules and Regulations framed under the Chit Funds Act and the Companies Act which are presently applicable, provide maximum security for the investors and the risk involved is minimal.

   Usually, big businesses will have a large capital base and the Banks and Large Financial Institutions will be too eager to help them with hefty financial packages to grab such accounts and increase their turnover. But it is not so in case of Small and Medium Enterprises who find it difficult to manage their Capital Investments and Working Capital.

   This is because these business entities will not be upto their mark in accounting, book keeping and capability to provide security demanded by them etc. Hence, these enterprises easily get caught in the web of Private Financiers and Money Lenders and end up transferring their hard earned money into the coffers of unlawful entities. Hence, Chit Funds are the most suitable and lucrative option for these Small and Medium Enterprises and Small & Medium Businessmen to route their savings and investments, as their procedures and Rules and Regulations are very simple and minimal. Saving or investing a small fixed amount every month would bring such investor a hefty or lump sum amount when the Chit is taken by them. Chit Funds are really a boon to the people in this sector.

   For Indians, Tours, Site Purchase, Education, Marriage, constructing one's Own House, Childbirth and now-a-days unforeseen and unexpected Health Contingencies are very important stages in their life. These occasions demand heavy spending and one has to have prior planning for such eventualities. Sometimes, these requirements arise atmost unexpectedly and at very short notice. Investment in Chits is the most convenient and easy way to meet such eventualities, as one can easily borrow on their monthly savings in chits. Banks offer Education Loans to students with an offer that repayment may be made after completion of the course i.e., after 5 or 7 years or as per the course duration. It is most common that one tends to forget that they have to pay the interest during this grace period (only for installments of loan repayment) and the accumulated interest in the grace period along with the loan amount will be an unbearable burden. Because of this, most of the Banks face increasing non-repayment in Education Loans. Hence, it is prudent to plan for the Higher Education expenditure of one's children through small monthly investments in chits.

   Fulfilling of one's dream of owning a Car, classy two-wheelers, Site, Land, Computer, LCD TV, Music Systems, etc., also demand lot of investment. Borrowing through Personal Loans from Banks for such acquisition demands higher rate of interest i.e., about 12 to 24% in addition to the head splitting demands of procedures and documentation. Even at this juncture, Investment in Chits comes in handy in accomplishing such possession.

   Fixed Deposits, Recurring Deposits etc. in Banks yield anywhere between 7.5 to 9.5 % returns. On the other hand Chits yield 12 to 16% returns. Growth of your small, periodic savings in Chits pays maximum dividends in comparison with any financial products marketed by the Banking Sector.

   Now-a-days, the handsomely paid employees of the IT firms, BPOs, MNCs, Call Centres, Customer Care and other Private enterprises are lured by the Private and Public Sector Banks in the guise of liberal issuance of credit Cards. The younger generation are unknowingly getting caught in a vicious web of Credit Cards. Even Luxury Cars are offered on post payment basis (Possess now - pay after a year, in other words, Buy now - Pay later). People end up paying double the Bank interest by inconsiderate swiping of Credit Cards for acquiring assets that they cannot afford or for which they should plan carefully.

   Much hype is made by the banking sector which claim to offer various kinds of loans to the salaried class, which are to repaid in a specified number of Equated Monthly Installments convenient to the customers. In fact, the gullible customers think only of the amount of monthly installment that they can afford to pay and realize that they were made to pay a hefty sum in the end. Instead, they can very well invest the same amount in Chits run by Registered Chit Companies and see their money growing at a fast pace and use the consolidated amount for their requirements. In Chits, a subscriber SAVES a fixed sum of money every month for a fixed duration and BORROWS – by taking the chit amount when in need and then PAYS till the end of that duration. So Chits are SAVE-BORROW-PAY schemes unlike the BUYNOW – PAY LATER schemes promoted by Banks.

   Investing in chits would be a wiser strategy than investing in Mutual Funds that carry moderate to high risks. Whereas the Mutual funds which in turn are invested in the share market are dependent on market conditions, efficiency in the management of such companies, controls of Trades and import and export policies of the Government etc., the Chits are much more safer and secure form of investment.