Susu is an informal means of collecting and saving money through a savings club or partnership. This has been practiced throughout Africa and the Caribbean for years. It is where a group of people take turns taking a pot of money that i saved from the group. They pay a specific amount of money each month or Bi-weekly until it is their turn to collect. Every person in the group gets a turn to collect until everyone has had a turn.
Yahoo Finance has created an app on your phone linked to your bank account where you contribute some money each month to the pool shared with a bunch of people you've never met before, and wait your turn to get a payout. You may be skeptical to this but it is safely backed by yahoo finance. You will get your turn even if others drop out.
This concept is sometimes called a rotating savings and credit association (ROSCA). It's a familiar system for many immigrant and migrant families and considered by some as a legitimate financial tool that has long helped these groups survive in challenging environments. People who do not normally have access to banks have been using this as a means to save money and now Yahoo has made it safe and easy on your phone.
How it works
Once you set up an account, verify your ID, and link your bank account, here's how Tanda works:
Create or join a "savings circle" comprising five or nine participants
Choose your payout position (more on this below)
Tanda will automatically process your recurring contributions and payout when your turn comes
If you're familiar with the time value of money, you're probably wondering why anyone would choose anything but the earlier payout positions. Yahoo Finance has built in a mechanism to address this: fees and rewards.
This is how it works and how Yahoo makes money off it:
You join a circle on the app where you agree to regularly put money into a pot.
Each designated pay period you money is automatically taken out of your bank account.
When it is your turn to take out the total pool amount is deposited automatically into your bank account.
Yahoo Finance takes an 8% cut of the first payout and a 7% cut of the second payout. This is also how the company plans on making money off of the app, according to Simon Khalaf, SVP and head of media brands and products . If you have the patience to take the last payout position, you'll be given a 2% reward.
Tanda also assigns each user a trust score, which can be built up over time. The higher your trust score is, the more options you have for joining savings circles (including private savings circles and circles with higher payouts) and choosing payout positions. If you're late with a contribution, you lose three points; if you miss a contribution altogether, you are banned from future savings circles until it is determined what happened.
If a member of a circle stops paying up, Tanda will step in and continue making contributions in their stead. In this way Yahoo takes the risk and you reap the rewards of either a low cost loan for being early in the pool. A hybrid loan savings plan for people with middle payout, or saving/investment for the last places in the group.
It has been proven that people are 3 times more likely to continue with a savings plan if others are dependent on them which is why this system works.
Who is this for?
Some one looking for some quick money to pay for something they need right now and do not want to go through the hassle of getting a loan or dealing with the high interest rates on a credit card. As well as people who do not have access to credit or have bad credit.
People who need to save for a large expense such as a vacation or a down payment on a car can take a middle place and get large payment when they need it with a combination of a loan and savings.
The last is my favorite and why I am using this app investing. That last spot with the guaranteed 2% interest is exciting for me. Why? Well if you do a 5 person Tanda Bi-weekly and you take the last bonus spot. You get a payout of everything you invested plus 2 percent bonus. You might think who cares 2 percent is nothing. This is the magic of it. When you get that payout you then start the circle again and receive another 2 percent. Over a year with no reinvestment of your gains that is a 10% guaranteed gain with zero risk other than Yahoo parent company Oak inc a subsidiary of Verizon going out of business and not paying the money it is holding. As you grow reputation and want to invest those gains it then adds to the total gains.
I am not receiving any money for talking about this app. I am just excited about it and want to get more people involved. You can find the app on the IOS store, Google Play, or this link to find out more information. http://www.tandasavings.com/
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