Smart Money Tips

Money Clubbing beats Recurring Deposits in their game!

By April 21, 2018 No Comments

Saving money means putting money in a Recurring Deposit, isn’t it?

Money Clubbing is the “latest” way of setting aside a fixed amount of money regularly (weekly, fortnightly or monthly)

And, it is 10 times more powerful than an RD!

In a Money club one can pick up multiples ( 6-10x) of what one has saved till date but in RDs  one gets back only what they save with some paltry interest.

The way you save money in a Money Club is the same as you do in an RD but the returns you can make, if you chose not to pick the funds early on, can be eye-popping!

Here is an example of a real Money Club on our platform:

Table #1: Assume you invest in an RD with a bank

You earn Rs 70/- interest in 7 months.

The table below shows you the interest earned :

  • Monthly Installment = ₹500
  • Tenure = 7 months
  • Rate of interest = 6% per annum.
500 INR Monthly R.D.
Installment Rate of interest (Annualised) Months M. V. Interest/Month
500 6.00% 7 518 18
500 6.00% 6 515 15
500 6.00% 5 513 13
500 6.00% 4 510 10
500 6.00% 3 508 7
500 6.00% 2 505 5
500 6.00% 1 502 2
Total 3500     3570 70

Table #2: Now, Assume you invest the same amount “WEEKLY”

You earn Rs 16/- interest in 7 weeks.

The table bleow shows you the interest calculation:

  • Weekly Installment = ₹500
  • Tenure = 7 weeks
  • Rate of interest = 6% per annum.
500 INR Weekly R.D.
Installment Rate of interest (Annualised) Weeks M. V. Interest/Week
500 6.00% 7 504 4
500 6.00% 6 503 3
500 6.00% 5 503 3
500 6.00% 4 502 2
500 6.00% 3 502 2
500 6.00% 2 501 1
500 6.00% 1 501 1
Total 3500     3516 16

Table #3: You invest in your “WEEKLY MONEY CLUB”

You earn Rs 222/- as interest!!

The data in the table below is from a real Money Club where users have contributed ₹500 (approx.) weekly for 7 weeks. For the same investment of Rs 500 per week the investor made 95.40% annualised returns!

R.D. comparable interest earned in a 500 INR weekly Money Club
Installment Rate of interest (Annualised) Weeks M. V. Interest earned
464 95.40% 7 521 57
471 95.40% 6 520 49
443 95.40% 5 481 38
421 95.40% 4 450 29
491 95.40% 3 516 25
494 95.40% 2 511 17
494 95.40% 1 502 8
Total 3278     3500 222

Conclusion:

Monthly R.D. Weekly R.D. Weekly Money Club
Installment ₹ 500 ₹ 500 ₹ 500 (approx.)
Tenure 7 months 7 weeks 7 weeks
Returns ₹ 70 ₹ 16 ₹ 222
Rate of Returns 6 % p.a. 6 % p.a. 95.40 % p.a.

 

Assuming an SIP of Rs.3000 per month with the Money Club
Month 1 2 3 4 5 6 7 8 9 10 11 12
Max Interest 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6
Interest Assumption 6 6 6 6 6 6 6 5 6 5 7 5
Saving Amount 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
Available Amount 3000 6000 9373 12755 16414 20117 24171 28573 32847 37663 42616 48313
Total Clubs 0 1 1 2 2 3 4 4 5 6 7 8
Input 0 5927 5918 11941 11897 17846 23798 23926 29684 35847 41402 47927
Output 0 6300 6300 12600 12600 18900 25200 25200 31500 37800 44100 50400
Unused Surplus 3000 73 3455 814 4517 2271 373 4647 3163 1816 1213 387
Monthly Earning 0 373 382 659 703 1054 1402 1274 1816 1953 2698 2473
Total Kitty 3000 6373 9755 13414 17117 21171 25573 29847 34663 39616 45313 50787

If you invest Rs.3000 per month in Money Clubs (i.e around 40+  clubs for 1 year), the total interest that you can earn will be around Rs.15,500  at a whopping 41 % p.a. rate of returns.

 

In Money Club In Bank RD (@7%)
Total Input (Rs) 36000 36000
Total Output (Rs) 50787 37449
Interest Earned (Rs) 14787 1449
Returns Rate %
41% 7.3%
Total Clubs invested in 43 na

 

The Eye Popping returns are possible because

  1. the interest rate is determined by actual real-time bidding amongst the club members
  2. the bank’s (spread) between the borrower and lender is also eliminated and distributed among the members.

Money Clubbing really unlocks the power of your hard earned Money. However, there is no free lunch! High returns come with associated risks as well. Please ensure that you are aware of the risks before you plan to dive in!

Happy Money Clubbing!  ?

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