That said, each Last Will & Testament creates the same scenario and (unlike in a Tontine) you typically know who you are in the Will alongside but this still doesn't seem to result in a spate of murder cases either.
In theory yes, but in practice, no such cases ever existed.
A good example is that the collapse of Swiss Air created am accidental Tontine among its pension beneficiaries. Rather than trying to bump each other off, they meet up every year to hear to jointly toast the good news about their rising income: https://tontine.com/news/swissair-the-accidental-tontine/
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.
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.
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.
Those rates and risks are meaningless without a baseline, as Einstein and 28 other Nobel Prize Winners may agree.
If you're familiar with the early retirement community, the simplest strategy is withdrawing a fixed percentage of your initial retirement portfolio, adjusting for inflation every year. For an 100% equities portfolio, these are the odds of success over a 30 or 60 year horizon[0] when backtested against Shiller's total real return data from 1871-2018
4%/30 year: 97%
4%/60 year: 89%
3%/30 year: 100%
3%/60 year: 100%
Hence my comment about spending a little less or saving more - 4% to 3% makes a massive difference in success rates. I'm sure you've done some backtesting of your offerings, and hopefully would be able to share some withdrawal amount vs success rate comparison, even if it's not an identical time period/comparison.
I mean, this just appears to be fixed nominal returns, minus a fee, multiplied by a factor from an actuarial table.
Contrast it with a calculator like this [0] that uses combines historical return and inflation data with actuarial data to show the variance of outcomes, not just average returns.
For instance, your calculator shows a scenario of investing in bitcoin and withdrawing >20% of your portfolio every year which makes zero sense once you account for variance of returns.
I like the idea of tontines, I'm glad someone is trying to bring them back, and I don't doubt that your product could help with longevity risk, but I haven't seen anything so far that actually shows that.
I'd like to see actual results from backtesting, or a prediction that takes risk into account, not just a fixed return.
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.
I've been with them since the beginning and have had my suggestions included in the UI (e.g. account nicknames) but as far as I can tell they're in some sort of freefall.
Something has gone badly wrong in there and the only answer is to close the accounts and move away asap. That's what I'm almost finished doing for my 4 companies and shortly my personal account.
FYI, after looking at about 20 banks we opted to go with Amnis in CH which uses Currency Cloud as its backbone.
Their UI is excellent and I've just noted that they have a double-sided reward for new clients such that if you register with amnis using a referral code (e.g. mine: 08e57b) and make your first transaction, they will pay you CHF 200.
