The Tontine Coffee-House (2018)
16 comments
·April 21, 2025GlassOwAter
mapt
These are two very different systems. It's interesting that they ended up sharing a name in different locales.
Usually "Tontine" is used for a retirement plan that people pay into, which distributes the dividends evenly among the surviving cohort of investors; The last survivor gets the whole pot of investment. They fell into disrepute in small part for having salacious incentives to murder each other as the number of survivors drops, but mostly for being in competition with life insurance, pension, mutual funds, and later tax-incentive-investment-account models that ended up being more favored by governments & finance.
What you're describing is what I know as a 'tanda'.
https://en.wikipedia.org/wiki/Rotating_savings_and_credit_as...
rundmc
There are versions of this 'ROSCA' Tontine in most countries and continents in the world. In the past when formed among strangers they have proven to be super susceptible to scams.
Where they work is when each member of the group is known to each other and therefore would lose social status by defaulting on their obligations.
The benefit of these arrangements when run properly is that instead of saving $10 per month and after a year having the $120 to buy a productive asset (let's say a cow), they can get the $120 up front from the Tontine and pay the money back to the community group out of the earnings from the milk etc.
The persistance of these schemes everywhere indicates that this is a valuable means for the less well off to gain access to lump sum amounts for purchases without paying interest. Not everyone will be happy about the last part of course.
mapt
Tandas / ROSCAs are useful savings vehicles when it is, for whatever reason, difficult to hold on to money for very long. There's the physical version of this (The local warlord regularly mirks people for their wallets; Or maybe your government has something called 'civil asset forfeiture'), the social version ("The husband with shared access to my accounts drinks it all away!") but also the investment / monetary version where you have limited legal investment opportunities ('Peasants aren't allowed in the stock market'), or you have hyperinflation and so have to deal with the complication of a constantly shifting dollar. The money doesn't need to dwell any place for long periods of time, it's collected and distributed and then _spent_ on an expensive non-divisible improvement to your life immediately.
I play a survival game called Rust. Progress is meted out through the slow accumulation of Scrap, which is spent on learning technologies. People constantly kill each other, and those who are ahead on tech tend to accrue advantages in combat. There is no "Bank", and no guarantee of the ability to set up a minimum viable base to store your resources. One of the most pathetic strategies to resort to on the busiest most crowded servers, when you're a few days behind, is to linger around the edges of a safe zone collecting small amounts of Scrap(dying every few minutes), literally play roulette with it at the in-game gambling system in the safe zone at 1:20 odds, and when you eventually win big, use your scrap to progress through the tech tree; It might be 1000 scrap to get your tech to where it needs to be to compete, and you might average 50 (w/ Std dev of 25) scrap between deaths, but you'll get there eventually in this way, whereas the non-gambler needs incredible luck (+38 standard deviations of success) to actually progress through this high price threshold.
A typical tanda removes the random chance element, but preserves the "Eventually you'll get there" element even while holding on to no money.
skort
What exactly is the scam? That someone isn’t extracting profits?
nanna
The English stock exchange and insurance industry were also established in coffee houses, albeit in the century prior to the American.
https://en.wikipedia.org/wiki/English_coffeehouses_in_the_17...
roughly
There’s a long history of coffee as a social force - namely because the alternative was usually beer, and you can imagine the wild swing in a population going from beer to coffee as their recreational beverage of choice. Coffee’s been implicated in the surge of “enlightenment” thinking, as well as the development of the financial industry (and, due to the former, also has a long history of catching the ire of kings and rulers.)
rda2
Before having children, I was quite interested in the idea of, and the math behind early retirement.
Most of the interesting math happened at the margin: you’ve got just enough money that you could retire, but you’re susceptible to risk of a market crash in the first few years of retirement or an abnormally long life expectancy combined with a middling market.
Tontines fascinated me as an interesting piece of the puzzle for those who don’t plan on leaving an inheritance, and I’ve reread this guide[0] a few times - but ultimately it’s just another way to possibly move the margin a little bit, and the real solution is to save a little bit more, then spend a little bit less.
[0]https://rpc.cfainstitute.org/sites/default/files/-/media/doc...
rundmc
Ahead of the launch of the first Tontine company in over 100 years, we have heard similar comments from many parents and for that reason have now created the Tontine Trust Fund.
The regular Tontine Trust is for parents that want to avoid the risking of running out of money in old age and becoming a financial burden on their children.
The Tontine Trust Fund is for parents that want to set aside an inheritance for their spouse or children now which they can configure to start paying the child a monthly income for the rest of their life starting at age X. This reduces the concern of parents that they will pass on a chunk of the inheritance to children that will 'blow the money' instead of making it last them for life.
Also, FYI: a) Research from the insurance industry indicates that tontiners/annuitants spend double what they would without having a lifetime income, thereby enabling a better quality of life in retirement. b) The Swiss Federal Institute of Technology, alma mater of Einstein and 28 other Nobel Prize Winners, has produced research showing that a retirees pension wealth is enhanced by 87% with zero added risk upon moving their savings into a Tontine, indicating that the gain is not 'marginal'.
All in all, the Tontine enables you to save a little less yet still spend more.
null
csense
With regular life insurance, you bet you'll die.
With a tontine, you bet you'll live.
The latter seems much more sensible to me.
LiquidSky
>With a tontine, you bet you'll live.
One problem is that everyone else in the tontine is betting you don't and sometimes are willing to act on that.
rundmc
As the founder of the first Tontine company in over 100 years, I cannot agree more.
Biganon
Surely you mean the first tontine out of Africa ?...
rundmc
Good point. I mean retirement tontines and tontine trust funds that pay members an income for life secured against hard assets rather than ROSCA tontines which are community savings vehicles designed for short term borrowing between members.
null
Interesting read. I was only familiar with a bastardization that goes by the same name. An ex is from Liberia and while her mom now lives in the states she still sends money to contribute to a tontine.
They pool their money together and then rotate who it all goes to every month or some pet period.
Sounds like a scam run on the financially illiterate.
https://www.modernghana.com/news/772009/tontine-microcredit-...