Planning to buy gold in instalments? Here’s how to do it right

Investing in gold in instalments can be a disciplined saving approach, provided you plan well.

Buying gold in monthly instalments has been a popular way to save for jewellery, especially ahead of weddings and festivals. Such "gold-saving schemes" by jewellers enable you to pay a fixed monthly sum and redeem it later against the jewellery of your preference. Though the idea is simple, some mistakes can turn the experience sour.

Know how the scheme works

Everybody has 10-to-12-month gold savings plans. You save a fixed amount of money every month, and after the span of time, you can buy jewellery worth the total amount. Some of them offer you a bonus — like missing one instalment or even giving you a low rate of interest on your deposits. However, they are not all the same and the terms can be quite different. Read the fine print before signing up.

Check purity and making charges

Even when you've saved enough, you may find that making charges or wastage expenses eat into overall amount. Some schemes allow you to buy only 22K jewellery, while others restrict the type of ornament. Clarify if making charges are exempted or reduced, and if you can buy coins or bars instead of jewellery if you prioritise investment over design.

Verify if the plan is regulated

Most gold schemes run by jewellers are not regulated by the Reserve Bank of India (RBI), whereas bank deposits are. If the jeweller runs out of business, your money's not secure. Choose schemes run by popular chains or the ones linked to SEBI-regulated digital gold platforms.

Also read | Investing in gold for your child’s education: Pros and cons

Keep receipts of all payments

Always insist on a proper receipt or electronic confirmation for every instalment. Never pay in cash without documents. It gives transparency at the time of redemption and allows you to take delivery of your legitimate claim in case of any controversy.

Compare it with other gold-saving alternatives

Before taking a decision, compare jeweller schemes with alternatives such as sovereign gold bonds or gold ETFs. They are government-backed, offer higher transparency, and even earn interest while tracking the gold price.

The lesson

Investing in gold in instalments can be a disciplined saving approach, provided you plan well. Take reliable jewellers, gather all receipts, and read the fine print meticulously. With a bit of prudence, your festive glitter won't be hidden with nasty surprises hereafter.