Indian households prefer fixed deposits for a 3-year period where interest rates range from 9.50% p.a. Banks – public, private, foreign and cooperative operates Fixed Deposit schemes. In a fixed deposit, a certain sum is deposited for a definite period. You can either opt for periodical (monthly/quarterly/half yearly or annually) returns or simply opt to get the amount with accumulated interest at the end of the prescribed period. Returns are assured but the interest income is subjected to tax making it less attractive. The effective rate of returns post-tax would be around 8% p.a. depending on the duration as well as the tax bracket of the depositor. However, there is no upper limit on the amount that can be invested in Fixed Deposits. Professionals and some savvy depositors who are willing to take calculated risk would opt for Public Deposits, which operate on similar lines except that they are offered by corporates in the private sector. These unsecured deposits currently offer a fixed rate of 11% p.a. for periods between 1-3 years. Furthermore, the interest earned is subjected to tax making them less attractive. The effective rate of interest post-tax would be around 9% p.a.
Fixed/Public Deposits require heavy investment in one stroke. So before these deposits are made, depositors should accumulate all their savings first. This is quite de-motivating for the majority as nobody saves for the sake of saving. Savings have a specific financial purpose to meet in future -purchase of assets/finance education or to make down payment for a vehicle loan or a housing loan. However, if individuals or professionals or small businessmen have surplus cash for the short-term, they can avail this cash flow to park in a running Group Funds where some members have opted out. This is a lucrative opportunity as the waiting time is shorter and the depositor also can participate in an existing Group with a decent discount. Moreover, there is greater flexibility in parking funds in an existing Group Funds as vacant Groups would be available across different fund values and maturities giving ample returns. The dividends earned on such funds can be reinvested to participate in other funds thereby enhancing the returns on investment.
It is equally safer to save with a registered chit fund company like GroupFund as it makes a Security deposit equal to 100% of chit value in a schedule bank as FDR, which in turn is pledged in favour of the Registrar of Chits. Therefore, a member in a registered chit fund company is very much secured than a member in a non-registered company. As regards liquidity of investment, a member can participate in the auction from the second month and avail the facility of early withdrawal provided he or she has made the payments up-to-date. If monthly contributions are paid by cheque, it should be realized before the auction date.
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Group Fund provided me the additional capital – when I needed it the most – for expanding my business. Ever after, I never thought of chit funds the way I did! - K.P. Loknath, Builder.
With GroupFunds the purchase of any asset (car, house, gold, etc.) becomes easier because of the breaking-up of capital cost into smaller amounts. You can build the finance for your asset according to your convenience, advance planning, and repayment capacity. - K. Muralidhar , Project Manager, TCS, Hyderabad
GroupFund offers the best source of finance at lower interest rates, and also provides insurance against unforeseen contingencies. Unlike financial institutions, I can draw upon my fund for any purpose – education, marriage, religious function, spiritual tour, medical expenses, or just about anything! - Sridhar, Team Lead, Infosys
I always wanted to buy a high-end digital camera to pursue photography, but did not have enough money. I was skeptical about finance from banks. Group Fund provided me the necessary finance. Group Fund is not only reliable, transparent, and trustworthy, but obtaining finance when you need is hassle-free and quick, with minimum documentation. - Bharadwaj, Web Developer in TrendaSource
Group Fund lets your worry about car finance take a back seat, allowing you to occupy the box-seat! - S. Giridhar, Project Manager, SRAOSS
Getting a home loan is easy these days, but paying it back is a big problem. Group Fund allows me great flexibility in repaying my debt in small and easy installments. - G. Manohar, HR, Pegasys
When my daughter’s marriage got fixed, I was worried about arranging finance within a short period of time. Group Fund came to my rescue like a savior. I was also able to pay off the loan without any hassles. - S. Anand Swamy, Designer, OMS3
My daughter was very keen in pursuing her higher studies in medicine from abroad. Group Fund helped my daughter in realizing her dream. Unlike banks, I got the money I required without any documentation or delay. Group Fund gave me both joy and peace of mind. - M. Santoshi, HR, APS Associates
After my retirement, I was worried about my finances. But, thanks to Group Fund, all my worries have now been put on the back-burner! - K. Nandu, TL, Soft Tech
My mother fell sick suddenly and had to be hospitalized. She had to undergo a major operation of the spinal cord. I fell short of money and at that time, Group Fund gave my mother a new lease of life by providing the necessary finances. - M K. Mohan, Programmer, MMG