How the plan works?
The plan allows you to make a monthly payment and gold prices of 20 business days would be averaged and gold purchased accordingly. The Gold Grams allotted would be of 24 Carat Gold of 995 fineness and upto 4 decimal points rounded.
Once you have accumulated enough, you can convert the same to Gold Grams of 24 Carat Gold of 995 fineness. You also have the option of purchasing jewellery through empanelled jewelers under the scheme. Interestingly, you can start with a sum of as small as Rs 1000 and in multiples of 100 thereof.
While the savings scheme may be a good idea for those looking at saving in gold for a function or an event at a later stage, there are some drawbacks. First, the gold jewellery scheme from a jeweller is a better proposition as they tend to pay one month of your installment, thus reducing your costs. Secondly, if a gold jewellery scheme is purchased from a jeweller they offer discount on making charges for jewellery once the scheme ends.
Apart from the above drawbacks Reliance My Gold Plan will charge you 1.5 per cent as administrative fee each time there is a gold grams allotment. There is also a fulfilment processing charge of 2.5 per cent which will be charged on submission of fulfilment requests within 1 year of generation of Customer ID.
There are no extra ordinary benefits apart from the usual benefit of disciplined approach to investing and buying gold. Of course assured purity and no default risk are the other benefits, but, that could be true under any scheme of a reputed jeweler or even if you purchase gold coins from a bank.
There are no exceptional benefits one sees in investing in the Reliance My Gold Plan. It's also difficult to see why gold prices would rise in the next one year. In fact, since last August gold prices have dipped from Rs 32,500 to the current levels of Rs 28,000. Investors in general are a little disillusioned with gold and people are busy chasing shares. Hence, you might want to skip the Reliance My Gold Plan as an investment.