Most of the top jewelers offer gold savings schemes, including Golden Harvest from Tanishq, TBZ's Kalpavruksha Plan, and Swarna Mangal from Gitanjali Group. P C Jewellers also has a gold savings scheme.

How the scheme works?

Most of the jewelers offer a scheme wherein you pay 11 installments and the company pays the 12th. Now, this means your return on investment is high and in fact, more than bank deposits. But, there are certain risks involved to these schemes. The biggest of these is a sharp escalation in gold prices. For example, gold prices have fallen from a high of Rs 32,000 in August last year to the current price of Rs 26000-27,000.

If an investor in the scheme plans to start the scheme today and gold prices rise, he would not benefit much, since 12 months down the line he would get less quantity of gold for the amount he has paid. Of course, if gold prices fall you stand to gain. Nontheless, there is an element of risk.

Another problem is that like the capital markets, which have a regulator, these types of schemes are not regulated. If a particular jeweler goes bust, be rest assured that your money would be gone. Of course, there are jewelers like Tanishq, which is a Titan company and is doing exceedingly well. Chances of them winding up is almost negligible.

Another disadvantage of gold schemes is that you would be forced to pay the making charges that the jeweler is currently demanding, though there are some jewelers who offer a discount on the making charges.

In any case, gold jewelry schemes have some risks and it's not as if to say it is the best saving scheme around. With gold prices falling, we cannot be certain whether it would be a lucrative proposition in the future.

Conclusion

If you are buying these schemes for a marriage or a particular function, you can go ahead. But, if you are planning to use the gold savings scheme as an investment, you should opt for E-Gold, which does not hassle you with locker and other expenses and tracks the prices of gold. Read more on e-gold here

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