Monday, January 14, 2013

Investing in gold through gold saving schemes offered by jewellers


This is a short note on the ROI that one gets when you invest through the gold saving schemes offered by jewellers.

 

The scheme works as follows:

·       You pay 11 monthly instalments of any amount in multiples of Rs 500

·       The jeweller pays the 12th instalment

·       You can redeem the total amount (12 instalments) and take a jewel for the amount.

 

What is not visible is the price of gold at which the sale will happen?

It is the price that is prevailing on the day of redemption (12 months into the future).

As the price of gold is expected to go up in India as long as India is a developing country, you do not get any advantage of this increase in gold prices  (for more details, please see my book where I have shared how to predict gold prices in future).

 
Plus you do not get any interest on the money deposited by you for the 11 months.

 
So is it a good ROI or a bad ROI?
You decide.