Chit Fund Money

Websoftex Software Solutions Private Limited, a Bangalore based Company, an authorized Software service provider engaged in Chit Fund Software Developement http://chitfundsoftware.in

In a typical informal kitty, the kitty fund is collected, winner picked and distributed all in the same day. So it’s up to individual members to store their contribution / winnings in a bank or as hard cash
Even if the kitty purse is collected in advance - it is typically kept as cash rather than being invested somewhere.

 

So a typical kitty does not promote "good investing practice". However it does promote good savings habits by creating a social obligation on members to save-up for their contribution on kitty day.

 

The second part is - those that "win" the kitty early-on have essentially gotten an interest free loan that they repay over the rest of the kitty's cycle. And those that win it later-on have ended-up (de-facto) giving an interest free loan to their friends. The net cost is -ve to early winners and positive for late winners.