A tontine is a type of investment scheme that was popular in the 17th and 18th centuries. It involved a group of people who each contributed a sum of money to a common fund. The money was then invested, and the interest was paid out to the surviving members of the group. The last surviving member would receive the entire fund.
Tontines were originally introduced by Italian financier Lorenzo Tonti in 1653. They quickly became popular among European nobility and merchants, who saw them as a way to secure a retirement income.
Tontines were based on the principle of survivorship. As members of the group died, their shares of the fund were divided among the survivors. This meant that the longer a member survived, the larger their share of the fund would become.
Tontines were eventually banned in many countries, as they were considered to be unfair and unethical. The schemes often led to unscrupulous individuals trying to harm or kill other members in order to collect a larger share of the fund.
Despite their negative reputation, tontines have had a lasting impact on the world of finance. They helped to develop the concept of life insurance, which is now one of the most popular types of investment product.
Tontines also played a role in the development of the stock market. The pooled funds from tontines were often used to purchase shares of stock, which helped to create a more liquid market for securities.
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