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When to buy

Gold Jewellery schemes made just for you

You wish to invest in gold jewellery, but in small installments that build up to a big enough amount on the day you plan to make your purchase. Many jewellers have their own versions of gold savings schemes for you.

Here's what these schemes offer.

In simple terms, they are similar to a recurring deposit scheme that you open in a bank. The difference is that, on maturity of your gold savings scheme, you'll have to redeem your money in the form of jewellery from the jeweller you opened your deposit with.

The most common version of the scheme asks you to pay a fixed amount every month for the duration of the scheme. Most jewellers then credit an additional month's installment to your account from their pocket.

The money accumulated in this fashion will have to be used to buy gold jewellery from the jeweller - at the gold rate prevailing when you decide to buy your jewellery.

Some jewellers will allow you to buy gold coins also with the amount invested. But you cannot redeem the amount that you end up accumulating in these schemes in cash – something each of these schemes underline right up front.

Most jewellers offer rebates on making charges and wastage – some even waiving it off entirely - while some waive off Value Added Taxes (VAT) too.

In another variation of this scheme, jewellers allow you the option of accumulating the gold corresponding to your monthly payment.

So, say you are paying an installment of Rs 1000 and the gold price is Rs 2500 per gram on the day you are making your monthly payment, you end up accumulating Rs 1000/2500 – 0.4 grams of gold – that month. Similarly for the rest of the months in the scheme. This turns it into a kind of gold SIP (Systematic Investment Plan).

Some jewellers also offer fixed weight schemes. Here you will have to decide at the beginning of the scheme about how much gold you want to add to your account every month.

You will then have to make payments every month based on the gold rates prevailing on the day of payment for the corresponding weight of gold.

On completion of the scheme, you can redeem the gold accumulated in this manner – again as jewellery usually.

In this scheme too, discounts on making charges, wastage and VAT are usually offered.

What you need to ensure

Make sure you are investing with a well known jeweller. Despite amendments to the Companies act, almost all these schemes, including those from Public Limited Companies, don't qualify as  “deposits” as per existing regulations. So, the only security blanket on offer is the reputation and the track record of the jeweller.

This will also help when it comes to making your purchase as a well known jeweller is likely to have larger collection.

Make sure too that you understand the scheme completely since they there might be minor variations/advantages on offer. Acquaint yourself with the exit clauses too so that you know your options in case you have to opt out of the scheme before maturity. Always purchase a hallmarked jewellery to ensure the purity you are promised of.