anybody heard of this? group money pool...

[kealina]

i hope this isn't too confusing....i heard of this group recently from an older person... basically a group of trustworthy, financially stable people got together and started this money pool... it has a set duration and a set monthly contribution... for example, the first month everybody contributes 1K and that is the only month they pay full price... then whoever wants to borrow can borrow but they of course have to pay it back with interest... depending on how much is borrowed, everybody else has to pay slightly less than 1K the next month (ex. 950)... basically, every month of the duration (2-3 yrs) the amt paid is different depending on how much is borrowed. the payment is usually pretty low around x-mas as plenty of people borrow... then, at the end you will be guarenteed to get back at least the amount you would have put in, and possibly more, had it been an even thousand every month. ie. 2 yrs = 24K and 3 yrs = 36K even if you only put in the equivalent of 34K or 32 or less... you of course come out more ahead if you don't borrow... still, i can't quite for the life of me figure it out... they tried to explain it by breaking it down into a monthly thing, explaining that if it's 1K and you only pay 950, that means you automatically made 50 that month which you will get when the rotation ends...
and no, it's not a scam... i thought about and realized those that i see that are involved in it have thousands of dollars in assets and are older and stable... even rich...
does anybody understand this? what do you think of it?

[Ima saver]

Well, I am older and it does not sound very good to me. You are guaranteed to get back what you put in? $1000 a month for 3 years is $36,000. I could earn $1800 dollars in interest in one year on $36,000 at 5%

[kealina]

lol... sorry, i guess i was confusing... you don't actually put in the whole 1K except for the first month to get the ball rolling... you might put in 900, 800, or even 700 or less... but your return is guarenteed to be at least what you would have put in which means you might put in 32K and get back 36K so 4K interest + extra i think but i'm not sure how much extra...i'm currently watching a smaller $500 one that is going to end next year to see how it actually works... for it to come out ahead they would have to earn more than 5,400 that 5% will yield... also, i guess it all depends on whether you have 36,000 in the first place to deposit...
i will check the numbers on the current smaller one and post back to see what you guys think...

[Broken Arrow]

Sounds like a DIY mutual fund or prosper or something.

Why not just stick your money in a High Interest Savings account and call it a day?

[Hypersion]

How is your money guarenteed? What if people borrow money and don't /can't pay it back? What is the interest rate if you borrow from the pool, how is the interest rate determind?

[Duchesse]

Years ago I found out about another type of money group from the caribbean born people on my job. It is called a Su-Su. Here's how it works.

Everyone who wants to be included on the job agrees to pay a set amount per week.

20 people contributing $100 per week, equals $2000.

Each person receives this lump sum ($2000) once over twenty weeks.

I've heard of a few horror stories, but not many. I've seen it work for some.


I believe "Hold, save, and count your own money."

[Ima saver]

Doesn't sound good to me.

[kealina]

BA, it's something we heard of and are looking at but actually we are too young and not stable (or rich) enough for that group... my mom is participating in a smaller 500 dollar one... we're keeping track of the payments to see how it works out because we live close to the contact and we are always dropping off the money...

hypersion... i have no idea what the interest rate is because my mom never borrows (means you get an even higher return) and just waits until the end to collect her money... as for what happens if someone doesn't pay, i'm not sure... that's why it is an exclusive group because they want to prevent problems like that... all of the members are older, established, homeowners, etc...people who wouldn't leave hawaii... also, they have to know where you live, how to contact you, etc... i would think, barring unforseen disasters, that all of these people can pay...

duchesse, that is interesting but if they all pay 100 how are they making any money? doesn't that equal out to 2000 over the 20 weeks?

DH doesn't want to pull the numbers up right now (he's gotta go to work) because it's on our backup hard drive but he's been keeping track of the numbers and said he thinks the return might be better than 7%....

ima, that's why i wanted to get everybodys feedback.... my mom isn't the most financially savvy person out there and i wanted to see what you all thought... it's up to her of course and it isn't like this is the only thing she does with her money.... she has a financial advisor invest some of it, she's got some in the bank, she has the retirement funded.... she invests some of it in her jewelry stock (to sell) and some other things...

[Ima saver]

It is just a risk i would not take for a few extra percentage points. glad you are helping your mom with this and let us know how it works out.

[Saving in So Cal]

I know I going to get a reputation as a naysayer, but I can almost guarantee you that this is scam. There are too many red flags.

The first red flag is the target market. Fraudulent investment schemes almost always target seniors because they have lump sums they need to invest and they are looking for good (not greedy) returns on their money to support their retirement. Unfortunately, they also tend to be more trusting than other investors, although I have been involved in cases where even very sophisticated senior investors have been duped out of their life savings.

The second red flag is the method of obtaining a profit. Why would the proposed target investor (an older, financially stable individual) need to borrow money in that manner or in small amounts.

The third red flag is the lack of documentation or security for the loan. What could happen (and, frankly, is likely to happen) is that near the end of the group's duration, when the pool of money is at it largest point, one of the members will borrow the bulk of it and default. (The member will have borrowed small sums along the way and paid them back to establish his/her trustworthiness and encourage continued investment.) Then, the member will turn out to be the exact opposite of financially stable, i.e., judgment proof.

I could go on, but you get the idea. If an investment seems too good to be true or too easy, it probably is.

[Ima saver]

Saving, you make a lot of good sense. You hear about this kind of things in church groups, where one member is so trusted and well known, but takes older members for a lot of money. I would not trust anyone with my money.

[veronak]

I actually participated in something similar, we called it Partner. Each person place "x" amount of dollars in the pool each week and 1 person gets their draw based on what the are contributing each week and the duration. For example I usually put $25.00 a week and it may go for 26 weeks a total of $650.00 so when I get my draw<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>

it will be $650.00 whether I am first or last. Only problem with this is, you don't earn any interest and you usually give the banker (the person holding the money) a small cut. I have done this for a while because I was unable to save a coin, but now that I have found you guys I put my $25.00 a week in my ING account. The money here is not guaranteed but it has been with the same participants for the 8 years and only once have we had a problem, some gave a counterfeit bill, and the banker put her own money in to cover it. Now we use the pen but other than that no one has ever skipped town

I guess I don't see the point. If you want to save money go to a bank. That way if you want to borrow money - well look to your bank account. No risk at all.

[kealina]

interesting point SoCal... i will point this out to my mom... hopefully she will listen.... if not, it's her risk.... she's had other things happen before like business "partners" pulling crap and other stuff... she has always come out ok though... my dad has a stable good pay job and they also have other streams of income... and no, i have no idea why she even does it... maybe i can get my sister to help my mom set up an online account?... we'll see i guess...

[tgavin71]

I too would stay well clear of something like this unless it is run by a reputable business. There is a housing co-op in Sydney where everyone who wants to be involved deposits $50,000. How you get that money is up to you. Every month, quarter, 6 months or year depending on the number of participants a name is drawn they are given an interest free loan for the total amount they need. All participants have to fullfill borrowing criteria before the loan is settled. Any new participants go to the bottom of the list. So it is fair for all. Granted you miss out on interest you would earn on $50,000 but not having to pay interest to a bank on $400,000 is worth it. Anyone who wished to withdraw their money can do so at any time with no penalities.

[rob62521]

This almost sounds too good to be true and you know what they say about that! Plus, being a skeptic, how can you guarantee everyone will put in what they say they will? The same on the loans -- how can the group guarantee it will be paid back. The whole thing sounds a bit risky.

[Ima saver]

It sure doesn't sound like they are making much money for the risk they are taking.

[Broken Arrow]

I'm probably being redundant now, but to be clear, I don't think it's worth it. You can get the same 5% from an online savings account, and they're FDIC insured, has internet access, can link with other accounts, may have billpay, and your money is liquid, available at any time....

[Duchesse]

Originally Posted by Broken Arrow

I'm probably being redundant now, but to be clear, I don't think it's worth it. You can get the same 5% from an online savings account, and they're FDIC insured, has internet access, can link with other accounts, may have billpay, and your money is liquid, available at any time....

I agree with arrow here, it's always best to be safe. Hold, count, and save your own.

[mud]

I say we start once here.

I can ummm hold the money in my bank account. Just send the money.