India’s obsession with gold jewellery is known all over the world. You can gauge it from the fact that last Dhanteras we bought 41 tonnes of gold! That’s how much a small aircraft weighs.

Across the country, gold is regarded as important because of both its emotional and monetary significance. While everyone wants to buy some amount of gold every year, acquiring it poses a challenge due to surging prices. Can you believe that gold demand declined in recent months as prices went up?

Acquiring gold, therefore, often requires thoughtful planning by buyers, sometimes saving for months. Gold saving scheme offered by jewellers comes across as an optimal approach to gold buying, especially for those who can’t buy at one go. However, these schemes are not without risks. Let’s dive into details.

What is Gold Saving Scheme by jewellers?

Gold saving scheme by jewellers enable customers to acquire gold by paying some amount every month for period up to a year. A number of jewellers across the country offer this scheme. It allows customers to deposit a small amount of money every month and redeem total deposits in the form of jewellery after 12 months. 

For buyers determined to acquire gold jewellery in easy instalments, the gold saving scheme allows to pay for only the first 11 months. The jeweller pays the last installment while the buyer can redeem full 12 instalments in the form of jewellery. Basically, you pay for 11 months and reap the advantage of the scheme after 12 months!

However, the exact details of the scheme may vary a little from jeweller to jeweller. Having said that, let’s look at the advantages and disadvantages of this scheme

Also Read: SGB 2023-24 (Series IV) Know Tax on Sovereign Gold Bond Scheme

Advantages of Gold Savings Scheme

To understand the advantage of this scheme, let’s look at an example:

Suppose you buy a gold saving scheme of 10+1 month by paying Rs 5000/month.  You also invest the same amount per month in a bank recurring deposit offering 8% interest for 10 months. Let’s see how much you may redeem from the scheme compared to the recurring deposit.

You are getting Rs 3143 extra by taking the gold saving scheme. It may be a better choice in case you are planning to buy gold jewellery in a year.

Disadvantages of Gold Savings Scheme

Well, it isn’t all that good about gold saving schemes. You should know the disadvantages of such schemes before committing to the jeweller. Some of the disadvantages are mentioned below:

• If you were to sell that gold instantly after buying, you would lose a minimum of 10%.
• Unfortunately, jewellery shops are not regulated by a financial body like SEBI. If they shutdown suddenly then you might find it difficult to get your money back.
• These options can’t be considered from an investment point of view because you will be paying a premium of about 33% in making charges. 
• These schemes don’t offer gold biscuits or coins as redeemable items. Therefore, it is only suitable when planning to buy gold jewellery as a gift or for any other purpose.

Conclusion

Gold saving schemes with different terms and conditions are offered by jewellers like Tanishq, Lala Purshottam Das, Jos Alukkas and others. 

You may go for a gold saving scheme in case you are planning to buy gold jewellery after 12 months. But you need to be extremely careful while selecting the jeweller. Checking online reviews online and reading terms and conditions properly may help. However, you should avoid putting money in such schemes if disadvantages are outweighing the advantages in your case.

Note: The above content is for informational purposes only. Not advice. Please consult your financial advisor before buying gold.