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Gold Savings Schemes Research Team | Posted On Thursday, December 20,2018, 03:46 PM

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Gold Savings Schemes



What are gold savings schemes?

Gold savings scheme is a jewellery purchase scheme that allows individuals to deposit money for a certain period of time each month. At the end of the term, the individual can use the corpus to buy gold like jewellery or gold coins/bars. These schemes are generally offered by jewelers, where you can buy jewellery or gold ornaments with the total money deposited along with the bonus earned.  The conversion is done based on the prevailing price of gold at maturity.

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Gold Savings Schemes

List of gold savings schemes:

Below are the names of some gold savings schemes that are available in the market:

  • Tanishq golden harvest scheme
  • Tanishq swarnanidhi
  • GRT golden eleven flexi plan
  • Joy Alukkas easy buy gold purchase plan
  • Malabar gold and diamonds smart buy scheme
  • Golden gain plan from Malabar gold
  • Bhima jeweller gold scheme

How do gold saving schemes work?

  • Interested people can enrol in the gold savings scheme any time and there are no registration fees.
  • You must choose a jeweler or a scheme where you want to enrol.
  • To enrol in the gold savings scheme, visit the jewelry store where the scheme is offered.
  • You can avail the gold savings scheme online, by visiting the online portal of the preferred jeweler.
  • The scheme has a maximum tenure that is fixed by the jeweler (11 months or 12 months).
  • Some jewellers provide schemes where they pay interest on the maturity of the scheme like Tanishq golden harvest scheme.
  • The scheme must be closed by purchasing an ornament from the same jeweller.
  • At the time of enrollment, customers will have to provide some documents like PAN card, Aadhaar card or any other identification document.
  • The monthly installment must be made every 30 days.
  • The installment amount comes in multiple of 1000’s and the minimum amount is fixed by the jeweler and varies across schemes.
  • Thereafter, the installments can be paid in cash or through online app or net banking.
  • The gold savings scheme can be closed by buying the jewellery on maturity.
  • You will also have to bear any sales tax and other applicable taxes during purchase of the gold.

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Documents required for gold saving schemes:

An account holder of gold savings scheme must provide any one of the following documents:

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Disadvantages of gold saving schemes:

The demerits of the gold savings scheme are as follows:

  • One huge set back in the gold saving scheme is that the jeweller offers a fixed value on maturity. Unlike gold fund where return can go up with higher gold prices, most of the jewelers offer you the same fixed value of gold jewellery at the end of the term.
  • The return on investment in gold savings scheme is much less than gold ETF and gold savings fund.
  • An account holder is eligible for a bonus at the end of the term. In case of discontinuation of the scheme, no bonus is paid to the investor by the jeweler.
  • The disadvantage of the gold savings scheme is that the jeweler earns interest on the amount deposited by the investor. Upon maturity, the jeweler pays back only a portion of the interest earned by him.
  • An investor can keep the amount in a recurring deposit and earn a higher interest at the end of 12 months than a gold savings scheme.  

Gold savings schemes Benefits:

The only benefit that a buyer gets in this type of scheme is a purchase in installments and keeping money intact for this objective.

Bottom line:

To reduce malpractices or corruption in the gold savings scheme, the Union Cabinet had recently approved the Banning of Unregulated Deposit Schemes Bill, 2018, to be raised in Parliament after a number of instances of people being defrauded by illicit deposit-taking schemes.

An investor must check whether these gold savings schemes fall under the Ponzi scheme category or not, before investing in such schemes.
If an investor wishes to invest money into these schemes, stick to reputed jewelers. Ensure all the receipts and documents are in place and payment record is shared by the jeweler. More importantly, stay away from offers and deals that look Too-good-to-be true.

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