Chit Money - 5 Lakhs Cash - Where to Invest

I think you highlighted with black color so question is not clear ……..

I Think ur contributing every month for this, so this is not ur income..! & question of investment is depend upon the risk bearing capacity & expected return. which is diff from person to person.

U can buy gold because that will fetch u very good return than others 

i think u will get very nomial by investing in postal saving account it is better to buy gold

Dear, 

The Chit Company forms different group each consisting of a certain number of subscribers. They agree to contribute a specific amount as instalment for a certain number of months. 

chit Funds have the advantage both for serving a need and as an investment. Money can be readily drawn in an emergency or could be continued as an investment.

·         Interest rate is determined by the subscribers themselves, based on mutual decisions and varies from auction to auction.

·         The money that you borrow is against your own future contributions.

·         The amount is given on personal sureties too; unlike in banks and other financial institutions which demand a tangible security.

     Because a sum received in chit fund is against your future contribution, may be taxed in same head in which original income falls. If it is untaxed income, may be taxed accordingly.

    As far as saving is concrened, you can invest partially in Infrastructure Bonds which fetch additional deduction in section 80CCF upto 20,000.00 and remaining amount may be invested in FDRs, gold etc as per your wishes.