Situation: My parents and their friends have started a type of Savings group.
66 Families involved, each pays 500 a month towards a money pot.
Every 2 months x amount of families are chosen to win 10,000.
In the end you lose 1,000 over 2 years, but that 10k basically goes towards savings, if you are not a saver.
Well, right after the first 500 payment, we won the 10,000.

Now, my dad is wondering what to do with it, in order to make money off of money, and not just recycle it all into the 500/month payment.

MY parents are 47(mom) and 55(dad). He wants to know what is the best type of investment for us at this point in our lives, as he is close to retirement.

Please help. thanks.

 

Put the money in a CD for now, unless the family has a brokerage account with mutual funds that are in the black.
That savings group doesn't sound legal, by the way.

 

Cd or money market savings account for now... look into some investments for down the road. Potbellies sandwich works is going public in june... thats gonna be a nice stock to get an IPO on... they're expected to go from 300 stores in june to 1100 stores by the end of 2010. you can bet that stock will jump up in price and hopefully split once or twice by then.

 

cd unless you want to do a mutual fund.

 

Sounds like a scam to me!

 

How do you only lose $1,000 over 2 yrs. What if your family never gets picked? Then you lost $12,000 over two yrs. I'm not sure I understand how this thing works.

 

probably whoever wins, doesn't participate in the drawing anymore, but according to my calculations, you lose $1k a year.

500 * 24 = 12000 - 10000 payout = (2000) :0uch:

even if you won the 10K at the front, you would have to make it earn $2000 in 2 years just to break even. what kind of a savings plan is that?

 

sorry, i gave the wrong numbers. and eveyone gets called in the end. you lose 1000 in the process, which goes towards 8 big parties they throw over the 2 years.

 

scam

 

Sounds legit, how do I join?

 

sounds poor. I'm participating in a similar deal but it pays out a lump sum to every family. I am depositing 650/mo. over 25 months, however, the lump sum payout to a random family would be 18500. Even if I'm the last one picked, that's 13.8% of "tax-free interest" over 25 months I could care less how the money is being used by the head ringleader, who is supposedly making money in other investments.

 

well, technically, i dont think its a scam.

In the end:
you are paying $1,000 for attending 8 parties. and getting the rest of your money back.