Gold Saving Schemes in India – Does buyer really get benefitted?


Gold Saving Schemes in India – Does buyer really get benefitted ?

Gold Saving Schemes in India – Does buyer really get benefitted?

Gold has become important part of an Indian’s life. Gold prices has been climbing year on year. Jeweller retailers are floating several gold saving schemes in India to attract the customers. Though there are several ways to invest in gold, Gold lovers are getting attraced towards these Gold Saving schemes.  Should you opt for such Gold Saving schemes in India?

What are the Gold Saving Schemes in India?

Jewellery makers have been offering gold saving schemes in India for a while. Basically, there are two types of Gold saving schemes in India.

I) Gold schemes where one need to pay monthly installments for tenure and jewellery maker would add one or two monthly installments at the end of the tenure. E.g. Tanishq offers a Gold Scheme in India by name “Golden Harvest Scheme”. In this scheme, a buyer would pay 11 installments and Tanishq would pay for 1 installment. At the end of the 12 months, you can buy jewellery ornaments worth of 12 installments from Tanishq.

Advantages:

  1. This would be a good saving option who cannot afford to pay lump sum amount to buy gold ornaments
  2. The buyer would get benefitted as jeweler adds a month installment at the end of the gold scheme.
  3. You can buy gold ornaments from the same jeweler at the end of the gold scheme.

Limitations:

  1. You can buy only gold ornaments with the accumulated amount. You cannot buy gold bars or gold coins.
  2. The gold you would be purchasing at the end of the gold scheme is at the prevailing market rates of Gold in India
  3. You need to pay making charges for the gold ornaments which may be Rs 30 / gram. You may not be in a position to negotiate on the making charges.

II) Gold schemes where you book smaller quantities of gold every month at the prevailing market rates for a fixed tenure instead of converting the savings into gold with final price. E.g. Malabar gold and diamonds offer Monthly installment scheme. You need to book minimum of Rs 500 worth of gold per month. The gold would be accumulated based on the prevailing market price. At the end of the tenure, you would have accumulated specific quantity of gold which you need to buy in the form of gold ornaments from Malabar.

Advantages:


  1. The buyer need not worry about the gold prices at the end of the tenure as he is purchasing the gold quantity on monthly rate itself.
  2. This would be a good saving option who cannot afford to pay lump sum amount.
  3. You can buy gold ornaments from the same jeweler at the end of the gold scheme.

Limitations:

  1. Monthly gold rates would fluctuate and you may not get equal amount of gold every month. With this, it is difficult to make out the actual cost of conversion. You would see the benefit if the gold prices at the end of the tenure is lower than your monthly installments.
  2. You can buy only gold ornaments with the accumulated amount. You cannot buy gold bars or gold coins.
  3. You need to pay making charges for the gold ornaments which may be Rs 30 / gram. You may not be in a position to negotiate on the making charges.

To whom these Gold schemes in India are suitable for?

These Gold schemes would be best suitable for:

  1. Buyers who cannot afford to pay lump sum amount to buy expensive gold ornaments
  2. Who want to invest smaller amounts and buy gold ornaments
  3. Suitable for those who are planning to buy gold jewellery for wedding or for any specific occasion ahead of time from a particular jeweler.

Snapshot of some of the Gold Schemes in India as of today

Gold Saving Schemes in India – Does buyer really get benefitted?

Alternatives to buy Gold instead of opting for Gold Schemes in India

There are other options to buy Gold at lesser cost and good quality

  1. Invest thru Gold ETF’s: Invest in gold thru Gold ETF’s every month. Gold ETF’s can be purchased as low as 1 gram. Buy such Gold ETF’s till the time you accumulate the gold in demat form and sell them off when you intend to buy gold ornaments and purchase them from a quality jeweler. You can negotiate about making charges as you are making lump sum payment to retailer
  2. Invest in E-Gold: You can buy e-Gold from National Spot Exchange. Like Gold ETF’s, you can sell the e-Gold which is in electronic form after a specific period and with the money you receive, you can buy gold ornaments

Readers, I invite your feedback and suggestions about this article.

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Suresh
Gold Saving Schemes in India


Article by Suresh

Suresh KP i.e. me have written 400+ articles on this blog. I love doing analysis and identifying the Best investment options.

4 Comments

  1. Srinivasa Rao says:

    Dear Suresh,

    I am srinivasa Rao from A.P currently investing Differnt mutual Funds like Franlkin Blue chip -G, HDFC Top 200, birla SUnlife Frontline Equity, Birla MNC, Reliance gold and i would like to invest 1000 more and i can go for medium /high risk Please let me know what is the best fund for coming 5-10 years ..so that i can go ahead..

    Please suggest me and am 31 years i have one kid

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