Investing every month with a jeweller to buy gold? Here’s how it works

As the festive season approaches and you plan your gold purchase for auspicious or other reasons, there’s a high chance that while you decide what to buy, the salesperson across the counter will start explaining their golden harvest scheme. The discussion usually begins with the benefits of the plan, such as how the jeweller will pay a certain percentage of the last instalment and how you can time it during the usual discount period to maximise your investments.

A Golden Harvest Scheme, often offered by jewellery stores and jewellers, is a savings plan that allows individuals to save over a specified period. Here’s how it typically works: Customers choose to make regular monthly payments towards the scheme, usually for a predetermined duration, often ranging from 10 to 12 months. The jeweller offers a specific payment structure, where they commit to paying a certain percentage of the total scheme value at the end of the term. To encourage participation, jewellers often provide additional incentives, such as bonus amounts or discounts when customers complete the full tenure of the scheme.

At the end of the scheme’s tenure, customers can use the accumulated amount (including the jeweller’s contribution) to purchase gold jewellery from the same store. This jewellery may be in the form of ornaments, coins, or other gold items available in the jeweller’s collection.

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Consider this: You can choose to invest between Rs 5,000 to Rs 5 lakh per month for 10 months, and in return at the end, your jeweller will pay you a bonus equivalent to 55 per cent , 65 per cent, and 75 per cent of the monthly amount for 10, 11, and 12 months, respectively. For example, if you opt to invest Rs 5 lakh, the jeweller will pay Rs 2.75 lakh (for 10 months duration), Rs 3.25 lakh (for 11 months duration), and Rs 3.75 lakh (for 12 months duration) upon maturity of the scheme. 

One of the drawbacks of the scheme is that it limits you from buying gold. You are restricted from purchasing jewellery, which could result in a loss of value due to making charges and wastage. Therefore, it is better to do an SIP or start an FD for goal-based investing.  There are also many Save Now Pay Later schemes available in the market that allow you to save first and then buy at the end of the tenure. Many such players also give you a discount from e-commerce players for the goal-oriented purchase.