Are Gold Saving Schemes From Jewellers Really Worth Investing?

Are Gold Saving Schemes From Jewellers Really Worth Investing?

Gold has always been an imminent part of any celebration for Indians. Whether it is a marriage, engagement, or even a rice ceremony, gifting and buying gold have become a tradition. However, the rapid rise in value has made it difficult for the common people to buy it. 

This is where the gold saving scheme comes in. Several renowned jewellers have popular schemes like Kalyan Jewellers Gold Scheme, allowing their customers to pay instalments where they will own the jewellery after completion of the tenure. Simply put, the primary purpose of these schemes is to make buying gold more affordable. 

How Do Gold Schemes Work? 

A gold saving scheme is similar to a recurring bank deposit, but in this case, the end result is purchasing gold. Gold saving schemes allow you to pay a fixed amount of money as instalments every month for a specific tenure. After the tenure ends, you can buy gold from the concerned jeweller at a price that is equivalent to the deposit. 

Gold saving schemes do not offer any interest on the deposit. However, the jewellers or banks offer a bonus on the total amount of the deposited sum. Most of the gold schemes offer to pay the last instalment or provide a discount on the same, in order to compensate for the interest deficit. 

Advantages and Disadvantages of Gold Schemes 

There are some benefits as well as disadvantages of these gold saving schemes. Following are some of the points you need to understand before availing a gold scheme. 

  1. The Advantages: 
  • Those who do not have that much financial capability to buy gold jewellery at once can save a little money under this scheme and get the desired gold at the end of their tenure. 
  • For people who do not have any other form of savings, this can work well as they can buy gold as an asset at the end of the tenure. 
  • You do not have to go to the jewellery store as there are several renowned jewellery schemes (e.g. Kalyan Jewellers Gold Scheme) that offer online payment options for instalments.  

However, there are some disadvantages that you should know. 

  1. The Disadvantages 
  • Cannot Redeem Cash: These schemes do not give you the option to redeem cash instead of gold. After depositing an amount of money every month, you cannot ask for your cash back even in cases of financial urgency. 

You will get no cash even if you stop paying instalments halfway. Also, jewellers even charge you money in case of premature discontinuation. 

  • Pay for Making Charges: Following the fact that the jewellers will get a sale after the tenure ends, they set the rule that you can only buy gold jewelleries. Jewellers charge a making fee typically ranging between 9-30%. 

You cannot opt for buying gold bars or coins as these do not require much making charges. In jewelleries, they can charge a good amount of money for making the designs. 

  • Not Safe As Recurring Deposit: Even if gold saving schemes are pretty similar to recurring deposits, gold ones are not as safe as the other ones. They might even use the deposit money for their operations also. These saving schemes are mostly for assuring their future sales. 

Some of the Gold Saving Schemes in the Market 

Some of the popular gold saving schemes in India are: 

  • Kalyan Jewellers Gold Scheme 
  • Gold Harvest from Tanishq 
  • Jos Alukkas Gold Saving Scheme
  • Shagun from Gitanjali
  • Lalitha Jewellers Gold Scheme
  • Nippon India Gold Savings Fund 
  • Shagun from Gitanjali 
  • Bhima Gold- Gold Schemes 

Should You Invest in Gold Schemes? 

Gold price is rising every day and there is barely any price drop seen in the past years. This is making it tough for ordinary people to buy gold. If you are planning to buy gold jewellery, say for your wedding or as a gift, you can opt for these kinds of schemes. Also, for people who are not financially organised, gold schemes prevent them from making any wrong decisions. If you are not able to save money on your own for buying jewelleries for an event, then also this is a pretty good solution. 

On the other hand, those who are disciplined and organised with their finances and want to invest in gold to get benefit from the expected price rise should go for other options like gold-exchange traded funds or ETFs. 

When Should You Invest in Gold Schemes? 

Considering the advantages of gold saving schemes, there are reasons why you might want to save in these schemes. But a common query regarding this is when to invest. 

  • When you do not have the practice of saving money each month, these schemes can help you develop a habit of regularly investing some amount each month, which you could not have done otherwise. By keeping the money aside every month you can develop financial discipline to buy an asset after a certain period of time. 
  • The second instance is when an investor does not have much knowledge about ETF and recurring deposits, they can at least save some money that will result in getting an asset. These schemes are simple and easy to invest in. So they are great from this point of view. 
  • Another great time when you can invest in these is when you have a ceremony due in the upcoming 1 or 2 years. You can systematically invest some money in purchasing gold jewellery. 

Analysing both the benefits and disadvantages, it can be said that for some people the gold saving schemes are very beneficial. Keeping the demerits aside, these schemes can be pretty profitable for those who want to save money for buying gold.