The different types of investments (P.3): tontines

Olá worker of GOD! May GOD grant you discernment, wisdom, good opportunities, and good relationships. Not everyone will be rich, but poverty is certainly not GOD's will.

** Olá = Hello in Portuguese

** Mén pà yǔ wènhòuyǔ (门帕语问候语) = Greeting in monpa (China)

1. Interest-bearing savings

2. Insurance products

3. Tontines

   1. Generalities and specificities

   2. Tips and points of attention

" Who lends money to the poor without interest;who does not accept a bribe against the innocent. Whoever does these thingswill never be shaken." (Psalm 15:5, NIV)

" A man who lacks understanding makes a pledge and becomes surety for his neighbor ." (Proverbs 17:18, SSegon 21)

" He that by usury and unjust gain increaseth his substance, he shall gather it for him that will pity the poor ." (Proverbs 28:8, KJV)

" Cut the grass from the fields and gather hay from the mountains while the new grass grows . Keep sheep to make clothes for yourself, and goats to buy a field . Feed yourself, your household, and your maids with the milk your goats give abundantly ." (Proverbs 27:25-27, Français courant - conversational French)

A. Generalities and specificities

A tontine is an association of savers. The tontine can be for-profit or non-profit. Savers or contributors agree to periodically contribute a sum of money over a set period. The savings are either shared among all (accumulation tontine), loaned to savers, allocated successively to a member (rotating tontine), or allocated to the purchase of real estate, or to finance a collective project (community or family). The frequency can be daily, weekly, monthly (most common), or quarterly.

A tontine can be both revolving and accumulative. This is often the case in Africa. One portion of the savings is revolving, and the other is cumulative. The cumulative portion is loaned to members to finance businesses, projects, or events in exchange for repayment with or without interest.

In the case of an accumulation tontine, the funds are accumulated until the members decide how to distribute or allocate them.

In the case of a rotating tontine , members agree to pay a predetermined amount at a given frequency. At each frequency or round of payment, one participant is designated to be the beneficiary of the other members' contributions. When all have been beneficiaries of the funds once, the tontine cycle is complete. A new cycle can begin. For the first beneficiary, the tontine is a loan (very often at zero interest). For the last participant, the tontine is a savings.

In Chinese rotating tontines , credits are remunerated and paid in full in advance. Example : Let's assume a tontine of 10 members, each saving 3,000 euros monthly. The sum of monthly savings is therefore 30,000 euros. This month, the amount of interest is set at 2,000 euros. A member wishes to benefit from a credit. He will receive 28,000 euros but will repay 30,000 euros from his monthly savings like all the members. If he proposes to repay part of the capital in advance (therefore receiving less than 28,000 euros), the amount of interest is lower and that of the next monthly contributions less than 3,000 euros.

In several countries (Africa, Asia, and South America), tontines are the primary competitors of banks and insurance companies. To such an extent that there are more and more apps and companies dedicated to managing tontines. They come in all sizes and types.

Three types of tontines are in decline and banned in several countries. These three types only exist in Europe and North America. I strongly advise against them:

• Financial tontines, in which profits are paid in full to surviving members after a specified period. The members' heirs receive nothing.

• Real estate tontines in which the property (land, building, or valuable furniture) will revert in full ownership to the last survivor, after the death of all other co-purchasers.

B. Tips and points of attention

There are those who have beautiful stories and those who have long nightmares. I'm serious. I don't want to be in conflict with either of them. It's up to everyone to decide in their own context . 🙂 My advice below is neutral.

• Of course, you must pray. May God grant you discernment, wisdom, good opportunities, and good relationships.

  
  

• Learn about the tontine's objectives, operating rules, management system, member selection method, relationships between members, and how previous cycles have unfolded.

  
  

• Favor transparent tontines. Tontines in which all members can see who has contributed, who is behind, who has borrowed. Not all tontines work with an app, a bank account, a WhatsApp group, or a group on another social network. That said, you need a system that allows for transparency. A system that doesn't rely on one person, but on many .

  
  

• Favor prudent tontines. Tontines in which identities, addresses, and employment status are verified before each cycle. Tontines in which savings are not distributed until after an observation period. Ideally, a tontine in which the first to receive savings are those who are the most reliable. For example, in a ten-person tontine, contributions begin in January, but the funds are not available for distribution until March.

  
  

• Remember that GOD will not choose for you, after prayer think about it .