Are Gold Saving Schemes from jewelers really worth investing ?

POSTED BY Jagoinvestor ON May 20, 2013 COMMENTS (92)

Are gold saving schemes by jewellers really a great investment option? There are huge number of people who become part of gold saving schemes offered by jewellers, assuming that they are amazing deals which they should not miss! There are few advantages and disadvantages about these gold saving schemes. It’s important to understand them before you invest in those.

Ankur asked this simple question on our jagoinvestor forum which triggered this article

Lately there are ads coming on TV abt this Golden harvest scheme (GHS) from Tanishq, where you pay for 11 months and the company will bear the installment for 12 month to buy Gold. Any reviews abt the scheme?

Gold Saving Schemes

1. Most of the schemes are plain money saving schemes

The way a lot of gold saving schemes project their plan is as if you are buying real gold each month, but majority of them are just plain money saving scheme where you deposit a fixed amount each month for X months and in the last month the jeweler deposits the “bonus” installment and then finally you use the money to buy the gold jewelery at the price prevailing at that time! Not at the gold price the time of joining the scheme! So in practice the whole scheme becomes like a recurring deposit where you deposit some money each month. The bonus installment deposited by jeweler makes sure you get a return around 8-10% on the overall installment.

2. You cant redeem Money

Unlike recurring deposits, you can’t use the money accumulated in gold saving schemes for any purpose. The gold saving schemes make it mandatory that you have to buy gold jewellery and only gold jewellery, not even gold bars or coins. So in case you need money for some other purpose, you can’t use it. But you will say that it’s fine, because at times you also are offered “Zero Making Charges” under these schemes, but you miss reading the terms and conditions which says that it’s only on selected designs and models. What if you do not want to buy those designs? In that case you have to pay the making charges which are applicable and what happens if the design and model which you like have much higher price than you have accumulated? In that case you have to shell out more money. The making charges which you will pay will cancel out the 8-10% returns which you make on the whole scheme.

3. Not as safe as Recurring Deposit

Now as you have understood that gold saving schemes deep down are just like a recurring deposit. However they are not as safe as a banks recurring deposit, for the simple reason that jewelers are not as strong financially as banks and some jewelers actually deposit the money they get in schemes in banks as fixed deposits only. Some jewelers might even be using the money for their operating expenses also.

4. Gold saving schemes are designed to guarantee future sales

If you look into the design of gold saving schemes, it’s clear that it’s a way to assure future sales. People join these schemes, start saving money with jewelers and after 1-2 yrs, they will buy some thing from them. So if X people join the program, all X people will buy something at the end.

R.K. Sharma, executive director from PC Jeweller confirms this – “This scheme is a business building programme. By getting customers involved in this scheme, we ensure future sales. A majority of the times, people purchase a jewellery for a higher price than the amount invested. It is a sure shot business opportunity through which we seal our future sales.” – source

Some of the gold schemes in market

  • Gold Harvest from Tanishq
  • Jewels for Less from PC Jewelers
  • Shagun from Gitanjali
  • Kalpvruksha from Tribhuvandas Bhimji Zaveri
  • Gold Tree from GRT Jewelers
  • Jos Alukkas Gold Saving Scheme
  • Kothari gold deposit scheme
  • Gold Schemes – Bhima Gold

When you should join these Gold Saving Schemes ?

So given these fine points, there are few advantages to these gold investing schemes and there are conditions when you might want to invest in those.  The first thing is that, a lot of investors who do not understand what are other kind of options for investment in gold like Gold ETF, e-Gold etc which are popular ways to buy gold online these days. Because of not having full information, investors get inclined to these schemes and invest on the name of “Gold”.  However good part of these schemes is that, because of these gold schemes, they atleast develop the habit of regularly investing some money, which they would not have done otherwise. So these schemes can be your monthly gold investing plan in a way.  These investors will not invest in gold ETF and simple recurring deposits anyways, so its better that they atleast invest in these gold investments schemes by jewelers atleast. So these schemes are good from that point of view.

Another reason when you can look at these schemes is when you have a marriage or function due in next 1-2 yrs and you might want to systematically invest some fixed money for the purpose of buying gold jewellery. Even in that case it makes sense to get into these schemes.

Have you invested in these kind of gold saving schemes online without understanding how it works? What are your comments on these kind of schemes?

92 replies on this article “Are Gold Saving Schemes from jewelers really worth investing ?”

  1. Swapnil says:

    Sir, please help me understand one thing. There is a big jeweler in our locality P and G jeweler.He is offering 4.5% pa interest on gold.He will give you cash for a gold which is lying idle at your home but that gold should be in form of bars or coins. I have come across articles saying that they are not regulated by RBI and in case of some problem (like default) , we won’t be able to turn to Government for help bcoz only SBI is authorised to do so.
    What is the correct information ? should we give our idle gold to a jeweler for interest? Is it safe?

    1. Will they give you back the same bar? I guess they melt it and use and later pay back in another form of gold ! . Not very sure. please check

  2. gazala says:

    A jeweler in Pune offers a scheme as Kuber savings. we have to invest a fixed amount of money each month, Has a direct debit facility, at the end of tenure gives you 8 % interest, can redeem in gold vedhani also which can be sold and cashed anywhere. Do you suggest it as a good option ?

    1. How is it better than a RD opened for the same purpose ?

    2. Rashmi says:

      Kuber scheme has this facility where gold is booked at the rate on the date of debit of installment every month… Hence considering gold price would increase or even fluctuate this seems better than RD

  3. Ahsan says:

    Last month I invested in the Alukas gold scheme wherein I have to pay a certain amount of money every month for 12 months. A the end of 12th month the Jeweler will pay 50% of monthly installment amount & gold jewelry can be purchased. .This month I went to pay the monthly installment & the Jeweler sales person insisted I invest in the upgraded scheme when in you get 100% bonus of monthly installment amount at the end of 1 year.He told me to cancel the existing scheme or leave as it is without paying the installments & the money will remain as it is and can be ustlized with the upgraded scheme at the end of 1 year .No fines will be imposed for non payment.Is it true?Have a feeling I am falling in to a trap & will lose money in the end.Please advise.

    1. I dont think there is anything wrong . But I didnt get what are you getting out of this scheme ? How is it attrative to you ?


  4. anu says:

    This article is so helpful. It had made me understand the economics and business tactics behind the swaying gold schemes in money robbing shops (i mean the jewelry shops)!

    1. Thanks for your comment anu

  5. Vasan says:

    Hi Shyam,

    Nathella seems to be better among the 2. After 11 months there is no making charge, wastage or VAT and you can even buy GOLD COIN. Its wise to buy some design jewellery as there is no making charge. No point in buying a coin as the wastage is always very minimal for a coin.


    1. Hi Vasan

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  6. Shyam Sundar A M says:

    Hi Manish,

    I am very much benefited after reading your article on Credit Card Reward Points & Cash Back Comparision – Unearthed. I am planning to invest in gold so I was searching ur blog thankfully I found this. My question is I am in dilemma of whether to invest in GRT or Nathella . Could you please suggest me which plan looks best according to you, eagerly awaiting for ur reply. Thanks in advance.

    1. Hi Shyam

      Cant do this level analysis at this moment, kindly open a thread on our Q&A forum –

  7. SANAL says:

    Dear Friend,

    I am doing a same kind of an investment with a jeweler Prince Jewellery. After reading all the commends i am confused whether i need to continue with the same of not. Kindly help me to understand the plan in which i am investing is really beneficial for me or not. i have mentioned the link contains the plan details Please suggest me the right one. I am doing a monthly installment of 8000/- per month from last August.

    Below given is the link contains some other plans offered by the jeweler.

    1. The question you have to ask is – IS IT BETTER THAN DOING RD and then buying GOLD At the end ?

  8. Ragini says:

    Which companies offer Gold saving funds? and which is reliable?

    1. None of them are reliable, because its never a contract with you, its based on 100% trust !

  9. Muthu Krishnan V says:

    GRT seems to have enabled online option to pay installments for savings schemes using debit/credit which is a nice feature. anybody tried registering for the same? I tried to but was not successful. Called GRT but the lady could not assist much.

    1. Thanks for sharing that information Muthu !

      1. Muthu Krishnan V says:

        called them again, was informed that for existing subscribers it will become available from next month, hope that happens and I can use my Credit card and add up some points 🙂

  10. Chetan Ambi says:

    Nice article Manish !! Keep it up.

  11. Sanjay says:

    Thanks Manish for this useful article.
    But I think investing point of view if we buy gold coins monthly, We will gate more profit than these plans. Because if we see yearly rates of gold are increasing tremendously.
    Please suggest as I am planning to invest in gold.


    1. Its true if you think the gold will appreciate after you buying it .. so go ahead if you believe in it !

  12. abhijeet says:

    Hi manish,
    I could not see your response to one of the comments, and since i am also interested in it, reposting for knowing your comments.
    Sadanand Nayak May 31, 2013 at 11:27 pm
    I have chosen a scheme from P. N. Gadgil & Sons.

    Here, quantity of gold (in grams) equivalent to your investment amount at the rate prevailing on the day of investment is set accumulated in your account. (Kindly note, the rates are mentioned on their website daily and also displayed at their store).

    At the end of 12 months, you will get the total accumulated quantity of gold plus 8% p.a. interest on your savings. You have option to choose, either jewellery or gold coin. You will have to pay for the making charges in case you choose to go for jewellery.

  13. seenujgs says:

    I think, the returns from Bank will be slightly higher interms of the amount.


  14. seenujgs says:

    If you compare rate of return from (Gold savings scheme) Jewelers and RD from reputed Nationalized banks, which one to prefer ? Including, the bonus offered by Jewelers for extra one month ?

    Srinivasan Narayanan

    1. Its nothing but the FD interest which they offer as one month interest.

  15. Nitin says:

    It’s really very helpful………….!!!!

    Its most important article before investing in the gold.

  16. HEMKUMAR says:

    Dear Manish

    GRT jewellers golden seed is one of the schemes which gives a good value for the purchased jewellery. As Mr.Muthu has pointed out earlier your gold is accumulated in weight as per the price of the date of payment of the EMI and at the end of 15 months you can redeem in by purchasing non branded jewels without making charges(value addition) upto 18% and VAT of 1 %. I have done few purchases as gift for my parents and sisters. On an average the non branded jewels value addition averages from 8% to 22% and you restrict your purchase to less than 18% with good planning of the requirement the average value addition comes to 13-14% and VAT exemption of 1%(borne by the jeweller). So the returns are around 15%(annualised 12%). This is an excellent scheme if you overlook the chance of default.

    1. Thanks for sharing that Hemkumar

      If its working well for you, then well and good ! .

  17. Dhivya says:

    Hi, my 2 cents.
    Nathella Jewellers in chennai have 3 types of gold savings schemes.
    Option 1: U pay the money for 12 months, 13th month EMI is paid by the jeweller and u buy gold
    Option 2: U pay some EMI, for which gold is accumulated as per dat day’s rate .
    Option 3: U aim to save some x gms of gold, so every month u pay the EMI as per ur need f gms.

    PROs: Has online facility, so its real good to block the lowest rate n accumulate ur gold instantly.
    Jewellwry bought out of this scheme dont have VAT, Wastage or making charges attached to them.
    Diamond, Ruby/Emerald and antique jeweleery alone is not applicable for dis option.

    Offlate they have started children saving plan, with 3 to 5 yrs gold saving scheme.
    Is this good??
    Seems good to me? am I missing anything?

    1. Hi Divya

      If you are eventually going to buy the gold, then go for option 1 itself

  18. Vivekan says:

    Dear Manish,

    I have a question.

    We dont have much ornaments at home. We really need to get some for my wife, we are ok to wait for 15 months.
    I have invested in GRT Jewel chit 15 months scheme started before 7 months.
    GRT is coverting my money into weight of gold when I pay monthly installments and at the end of 15 months its written in the aggrement that I can walk away with a jewellery equal to the weight of the gold that I have accumulated(provided that the jewellery I select has no wastage more than 18%).
    The reason I started with GRT is that I can avoid the hefty wastage they charge.
    Do you think what I did is correct ? Kindly advise.

    1. Yes. I think you have taken right decision if you anyways want the gold at the end !

  19. Mani says:

    Hi Manish…what would happen if the jeweller selling these gold schemes goes through an unfortunate incident of bankruptcy. Is he obliged to pay us back the money that we have invested in these schemes? Does it have the same status as the bonds/NCDs or other loans that a company has taken from public/banks which it has to clear first even before paying off its preferential shareholders when its assets are liquidated?


    1. thats a good question . I think YES, even in their care they will first have to pay the debtors .

  20. Kalpana says:

    Dear Manish,

    Happy texting u…

    I have taken two plan in GRT…Golden seed and Flexi plan…could you pls tell me whether both the plans are good investments…

    Awaiting reply…

    Kalpana. R

    1. What is the return you are going to get in these ?

      1. Muthu Krishnan V says:

        GRT flexi plan has two options, option 1 and 2.

        In option1, gold equivalent to the amount invested gets credited to your account on that day’s price. At the end, “plain jewellery” could be bought without making charges upto 18% and vat of 1% is excluded.

        In option 2, the amount gets added up and at the end one month bonus and 40% of a single installment is given and gold can be bought at that value, though making charges need to be paid. The XIRR rate is 14.24% before taxes.

        The good part is at the end of the tenure, either option 1 or 2 could be opted for and hence the benefit of hind-sight is available. If gold prices stay close to the average or are lesser than option 1, option 2 could be selected (ofcourse making charges and vat need to be taken in consideration). If gold prices go up significantly, option 1 could be selected.

        Another advantage i see is that for option1, since 18% of making charges are excluded, one could buy plain jewellery for close to the gold accumulated and these could be used by the ladies in the house and later on when need could be exchanged for other jewellery similar to a gold coin/bar in case one wants to pass it on to the children.

        These schemes are suitable in case one is looking at gold for consumption as in gifting for daughter’s/son’s marriage, gift to wife/parents etc. and not for conversion to cash.

        I invested in this scheme yesterday. Let us see how it goes.

        1. Thanks for sharing that Muthu .. really looks good

  21. Sadanand Nayak says:

    I have chosen a scheme from P. N. Gadgil & Sons.

    Here, quantity of gold (in grams) equivalent to your investment amount at the rate prevailing on the day of investment is set accumulated in your account. (Kindly note, the rates are mentioned on their website daily and also displayed at their store).

    At the end of 12 months, you will get the total accumulated quantity of gold plus 8% p.a. interest on your savings. You have option to choose, either jewellery or gold coin. You will have to pay for the making charges in case you choose to go for jewellery.

    1. Vivek G says:

      There are better plans available in Pune.
      PN Gadgil gives lower returns than some other good jewellers.

  22. Anuj Raghuvanshi says:

    Dear Manish Sir!

    Muthoot Finance is providing scheme i.e.
    “Muthoot Kanakavrishty Scheme (for 6 months)
    Muthoot Finance Ltd. is happy to serve its customers with some of the most flexible & interesting schemes in the gold coins service. Our Kanaka Vrishty Scheme enables purchase of gold coins even on an installment basis without the extra burden of interest. We also make it possible to buy the coin at its today’s rate while the payment takes place later on over the next year.”
    Should I invest. Kindly Reply

    1. I would not do . Can you take the risks involved ?

      1. Anuj Raghuvanshi says:

        And what is that risk?

        1. Company going bankrupt ?
          Gold Prices coming down ?
          Company in heavy debt when it has to handover the gold to you and could not do that ?

          Are you fine with these ?

          1. Anuj Raghuvanshi says:

            thanks alot sir!
            I will think on all these parameters now onwards before investing. Really thanks.

  23. Pingback: Are Gold Saving Schemes from jewelers really worth investing ?Network FP
  24. Deepak says:

    Hi Manish,

    I follow your website every week. Thanks for the very useful articles.

    In this gold scheme article. I have a point to add.
    Last month I took 2 gold schemes from Khazana Jewellery Bangalore.
    First Scheme : They put aside the amount of gold for your monthly installment at that day’s price. If the price is low, they allow you to pay 2 or 3 EMI and block more gold at a lower rate. After we paying the 12 EMI’s, the 13th EMI worth gold will be given that day’s price.
    Second Scheme: Pay fixed amount each month and after 12 EMI’s they will pay 13th EMI and you are allowed to purchase gold jewellery or gold coins too.


    1. Thanks for that info 🙂

  25. Satheesh says:

    Hello Manish,

    I am planning to get married in next 2 years . I want to buy gold for marraige.

    In the current GOLD price scenario, what is best option ?
    2) Gold scheme
    3) ETF
    4)Gold funds

    Request your feedback .


  26. bemoneyaware says:

    In my article Gold saving schemes I have compared various jewellers like
    P C Jeweller: Jewels for Less,Tribhovandas Bhimji Zaveri :Kalpavruksha Plan Super,GRT Jewellers: Golden Seed,Gitanjali:Tamanna – Monthly Saving Scheme,TANISHQ Golden Harvest Scheme

    1. Glad to know that you compared so many . I didnt go in that detail 🙂

  27. Sudeep says:

    Hello Manish,

    Good to see you doing great. Few weeks back, I sent you one mail on your gmail and linkedin account. You didnt respond. Please have a look whenever you get time and get back to me.


  28. Pinaki says:

    Very good article. Educating investors. Typical of this site. Thank you Manish. Please share how you select so relevant topics. Your selection of topic almost always surprises me.
    Best of luck and keep on good work.


    1. Thanks Pinaki 🙂 . I would say its just the passion which brings the best out of me 🙂

  29. Karthikeyan says:

    Given that gold prices are coming down, are Gold ETFs still an attractive investment? Isn’t it better to purchase physical gold instead?

    1. No one can tell that , what is prices start moving up now ?

  30. niru says:

    Thanks for such a useful article. i have been investing in golden harvest scheme of tanishq. but i am not satisfied with the scheme because at the time of purchase of ornaments in this schme they are making huge making charges so the bonus amount which we are getting at the 12th month is useless.

    1. Niru

      Thanks for sharing your case with us 🙂

  31. Kirti says:

    How do you calculate the interest rate as 9-10%? In case of Tanishq scheme that you mention- Invest 11 monthly instalments, the last instalment in borne by the company- a simple XIRR calculation in Excel shows much higher returns. I was an investor in this scheme and want to know if I have got my maths wrong.

    1. What are the numbers you are using and what is the final return you are assuming , also is it after tax numbers ?

  32. bharat shah says:

    not to comment any thing over the subject matter of the article ,but like to point out facts for investment in gold etf and gold fund units , particularly for self use on latter date ,or goal like gathering gold for kid’s marriage:
    1. by design ,in gold etf, your gold bought would get diminished at rate of @1% p.a. for its AMC’s expenses, irrespective of the prevailing price of gold. for gold fund unit , it would be more.
    2. even you don’t want to sell (i.e. you use for yourself, or gift), you have to shell out tax as short term or long term capital gain, as you have to redeem gold etf units, unless you have 1000 units of gold etf for physical gold.

  33. Jan Mohammed says:

    please advise how i can buy gold through this scheme I am out side of india

    1. You will have to contact the jewelers !

  34. Jiignesh says:

    Do a SIP(systematic investment plan) of Gold coin, Buy a coin every month for coming 10/15/20 years…”

    1. Choose a GOLD SIP plan

      1. Jiignesh says:

        Gold coin is cheaper then Gold SIP by any Fund house.

  35. angan chandra says:

    It is like a RD investment. So if you have need for gold jewellery either for yourself or by gifting purpose then only you choose gold scheme. For investing ingold you should choose gold ETF or buying gold bar/coin etc. So before investing Gold scheme, compare with RD interest with gold scheme, then you should proceed. The only difference is that RD is a safe investment where gold scheme are not technically safe.

    1. Thanks for your inputs Angan !

  36. PrAvEen says:

    If you have an occasion within 2-3 years like marriage for which gold ornaments are required then Gold savings scheme is a lot better then Gold ETF.

    Suppose you invest 5000 p.m in gold savings scheme & gold ETF at same time, at end of year atleast in gold savings scheme I will get one month extra bonus where as in gold ETF I won’t get anything other then incurring transaction charges. The worst is investing in a Gold Fund where I had to pay 1% as AMC per year. Selecting a good reputed retailer can guarantee quality of ornaments.

    The argument that you can’t use this money for anything else is absurd in 99% cases as you had a requirement for gold in near term and you must not use this money for other purposes

    1. Thats extremelly right and great point 🙂 . It calls for another article !

  37. Rajandran R says:


    Next to Chit funds people are running towards Gold Saving Schemes.Any such regulations or regulatory body to govern these for these Gold Saving Schemes?

    Rajandran R

    1. GOod point Rajandran !

  38. Abhisheka says:

    Hey Manish, hello again…

    Nice article.
    I have been investing in similar scheme which approx giving return of 9%/yr.
    I was not aware about we have to purchase jewellery only not coins/bars .

    Primary motive behind choosing such scheme is , keeping in mind future purchase of gold jewellery, which we usually make twice or more in a year.

    Its obvious , such schemes should not be part of your primary investment plans. It can be an add-on.

    Yes, we are not getting back cash directly, but it is systematic purchase of gold jewellery.

    As you wrote, we bound to buy jewellery from same jeweler with limited design option… that will be a challenge for ladies… 🙂


    1. YEs, if you are clear about the outcome, its a good thing to go with it 🙂

  39. kvi says:

    I have good experience with PNGadgil jewellers in pune.Once you have paid your installements wait for the lowest price within say 3 to 5 months and buy gold rings Called “vedhni” and retain this in your stock .As and when you need and when gold prices are high, go ahead and buy ornamanets of your choice.Almost all the jewellary for my sons and daughter marriage are easy prodcuts from the scheme.
    When i started there was no gold etf and any way middle class mortals can only think of bare needs and not invest to multiply!!!

    1. Abhijit says:


      I am not able to understand the scheme from PNG where you have invested & got benefited. Does it mean that with installment money you can buy “vedhni”? pls explain…if possible.

      1. kviyer says:

        Yes . after maturity in case the you do not want to buy ornaments and if the price is low, buy vedhni and keep it . say you get at x gms . later when the gold prices go up, trade the vedhni with equivalent gold as ornaments.making charges will be aplicable. effectively you will be buying gold x+-% at lower price, and using it to buy more( weight) gold .Of course this is useful for use limited income families.

    2. Thanks for sharing that point !

  40. Pradeep says:

    Thanks Manish for this very relevant article.
    KFJ in Chennai has a similar plan. But, they offer that you get to accumulate the gold in every month, that too, for the lowest rate in that month.
    So, end of the tenure, you are not going to pay for the current market rate. Here is the link:
    Would that be a better idea to invest here?

    1. GAGAN SINGH says:

      This sounds really good. awaiting for Mainsh’s analysis on this.

    2. Ashish G says:

      Dear Pradeep,

      I feel, these scheme are not for investment in gold but actually a way to accumulate gold. If you are looking at gaining from investing in gold, best way is to invest via Gold ETF or Gold Funds.

      In these scheme, you end up buying gold ornaments / jewellery, also adding the making charges, design charges, taxes etc and hence the final price is higher than what you actually thought of. Once you decide to sell these, again you pay reduction charges / buy back charges so net return is much less.

      Whereas, for ETF / MFs that’s not the case (only some brokerage or entry / exit load) which is fixed and you can account it for, while calculating returns.

      So, use these schemes, if you want only to buy physical gold for the pride of possession / gifts / making your loved ones happy by buying something. But for returns, go for ETF / MFs.

      1. bharat shah says:

        ‘Whereas, for ETF / MFs that’s not the case (only some brokerage or entry / exit load) which is fixed and you can account it for, while calculating returns.’
        you are right that gold jwellry is not the right way for investing in gold, but gold etf units or gold fund units are also not hidden cost as under:
        1. by design ,in gold etf, your gold bought would get diminished at rate of @1% p.a. for its AMC’s expenses, irrespective of the prevailing price of gold. for gold fund unit , it would be more.
        2. even you don’t want to sell (i.e. you use for yourself, or gift), you have to shell out tax as short term or long term capital gain, as you have to redeem gold etf units, unless you have 1000 units of gold etf for physical gold.
        compared to them , e-gold or even bullion gold (i.e.physical gold) if you have to buy 100gm or more, are better for recurring expense, as i think.

        1. bharat shah says:

          kindly correct my above reply forth line as under:
          etf units or gold fund units are also having hidden cost as under:

    3. Its marginally better, but your price is still limited for that month lowest .

    4. GUGAN says:


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