Our family went to the gold shop recently to purchase some gold ornaments. We have purchased some Lakhs of gold. And the shop sales associates have motivated us as the gold in an investment not a money-wasting thing. Yes, they are right with their words, gold is an investment scheme. But the ornaments we purchase good for investments? Just know about the gold investments methods. I have seen the bill for the ornaments there are many charges to purchase the ornament.
Our family Gold scheme:
Putting these things apart as we are waiting for the bill which needs to be generated. The manager of the store has arrived at us with a booklet. We have no idea what things are about. But the manager began to start talking about the usage of the gold. Gold is the best investment option in today’s world. And he began to say there are good schemes where he saying that we get some benefits regarding tax.
He stated a scheme where we need to pay some amount monthly which can be redeemed while purchase in future. The benefit here is there will be no making charges on the ornament. It is a good scheme but after thinking about the scheme. Some flaws do not make much difference, but the shop benefits. Every month we pay a certain amount. But the gold we purchase in the future is at the price of the that day.
Here is the loss, in the first month, such that if we are paying 10K per month. In the first month with that money we could get two grams of gold. As the gold price increases every month at the end of the scheme. We eventually return to buying only 10 – 15 grams of gold. But in as per my views if we purchase 10k worth of gold every month we get four grams more.
Not only this there are certain more problems in this scheme which we need to check before buying the scheme:
One needs to check whether the nomination facility is available or not in the scheme. If the holder of the scheme unfortunately passes away, the nominee should receive the money.
The next one is regarding the bankruptcy of the shop. We are seeing many of the shops and other industries leading into bankruptcy. While in the middle of our scheme if the jewelry shops lead in this situation. What is the safety for the money which we paid?
Types of Gold scheme’s from jewelry shops:
After the scheme our family ended up buying the little loss-making scheme as per my analysis. I have dived into the research of the gold schemes provided by different companies. All the jewelers in the market provide only two types of schemes which they name differently and some minor changes.
While getting into the deep dive of the first type of scheme which is the amount accumulated scheme.
Amount accumulated scheme:
Here, as I have said before, our family ended up buying this scheme. In this scheme, you need to fix the amount and tenure which you want to pay. You pay the amount monthly throughout the tenure that you have selected. In the last month of the tenure, you will be able to purchase the gold according to that day’s price.
Benefits:
While peeking into the benefits of this scheme we have two options. One is with benefits and another one is without benefits. Let us dive into the benefits options.
Here you all ended up paying X amount for every month up to 11 months. The amount paid will be eleven times. The benefit you get here is 50% of X amount will be added as a bonus to your total amount. Which is 11X + 50% of X.
Not only this but the ornaments have some other charges which are known as value-added taxes. Here you will benefit too. If the value-added tax of an ornament is 18% or less than that then you will get a 50% discount.
No bonus option:
Here the benefit is just clear. In the bonus option we have seen 50% of the X amount added to your total savings amount. But here they give you the benefit of canceling 100% of the VAS for the ornaments.
Weighted accumulated scheme:
Here the scheme is in such a way payment is similar to the amount accumulated scheme. The tenure and monthly payments are common. When it comes to allocating the gold, as you pay the scheme on 1st May. They calculate the weight of the gold according to the price of the present day allocates to you. This continues every month as you make the payment.
Benefits: Here also there are two benefits such as a bonus and no bonus option:
Bonus options:
This works the same as money money-accumulated scheme. Where 50% of the amount worth weighted gold will be added to the list of your gold weight. And the VAS on the ornament which you purchase will be reduced by 50%.
No Bonus option:
As you pay for 11 months you get a certain weight of gold in your pocket. And you get a 100% discount on the VAS of the ornament.
Let us get into the doubts about the schemes:
The first main doubt one will get is when the ornament you wanted to purchase is more than the amount you have saved or else weighed more than you saved. Then what about the benefits that we get?
Let us think you have saved 1,10,000 of the amounts in 11 months. As in the bonus scheme, you get 9% VAS, but your purchase of yours is 2,00,000. Then for the remaining 90,000 of the amounts, you need to pay a total of 18 VAS. This thing applies to both schemes.
For the no bonus scheme, you will get a 100% VAS discount on the money of 1,10,000. But for the remaining 90,000 you need to pay 18% VAS.
The other one is, what if the VAS is more than 18% then what is the situation we need to end up in? When it comes to the bonus scheme, where you get a 50% discount on the VAS. Here the ornament which you wanted to purchase is about 20% VAS. Then you need to pay 9% + 20-18% which is 2% VAS total of 11% VAS on the ornament.
When coming to the no bonus scheme for the same situation. You need to pay only 2% VAS as you get a 100% discount on 18% VAS.
Nominee benefits:
All the providers are completing the KYC with nominee details. Whom do you name as the nominee while joining the scheme he has full rights on the scheme.
Quitting options:
some of the gold shops have provided quitting options, in the middle of the scheme. On which date you quit. The amount or else the weighted gold you saved till that date equivalent ornament is provided.
Remember there will be no money given to you, even if you dislike the options of jewelry they have. You have access to visit another branch and purchase the ornament with the scheme. But the money cannot be returned to you in any case.
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