One of my cousin sarted investing in Chit Funds….
Total Value of the Fund : 110,000
Total payable Months : 22
Paid Till Now : 8 Months
Paid Money till now : 27290 (Actual was 5000 per month, and he paid till now 27290, due to reduction in payment amount because other people had taken out money)
As of now if he calculates profit normally it is coming as 11.5%…. (Considering going forward he pays 5000 per month without any reduction)
And the Chit Matures on 10-Jun-14.
Now is this calculation correct?
***** I do understand this is a HIGH RISK bussiness, but want to understand the Returns part.