Navamoshi Chit offers several advantages as an investment option. Here are some of the key benefits:
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Flexible Savings and Borrowing: Chit funds provide a unique combination of saving and borrowing. Participants can bid for the fund amount when they need it, offering flexibility in financial planning.
- Access to Lump Sum Money: Members have the opportunity to access a lump sum amount when required, which can be useful for large expenses like education, medical emergencies, weddings, or business investments.
- Lower Interest Rates: The interest rates on the borrowed amount in chit funds are often lower compared to other financial institutions, making it a cost-effective borrowing option.
- Regular Savings: Chit funds encourage disciplined savings among members, as they are required to make regular contributions.
- Dividend Earning: Non-bidding members can earn dividends on their contributions, which can enhance their overall returns.
- Credit Building: Regular participation and timely contributions in a chit fund can help build a credit history, which may be beneficial for securing loans from formal financial institutions in the future.
- Accessibility: Chit funds are often accessible to individuals who may not have access to formal banking services or other investment avenues.
- No Collateral Required: Unlike traditional loans, chit fund members do not need to provide collateral to access the pooled money.
- Community-Based Trust: Chit funds are often organized within communities, fostering a sense of trust and cooperation among members.
- Regulated and Legal: In India, chit funds are regulated by the Chit Funds Act, 1982, which provides a legal framework and safeguards the interests of participants.