Wednesday 21 September 2022




It’s the SEASON OF FESTIVALS and of course, the season for the Women's Best friend, GOLD!! WE INDIANS LOVE GOLD!

Gold is very close to women and has a huge sentimental value and an emotional attachment.


One of the most popular ways of buying Gold which even a common middle-class family is looking for is a GOLD CHIT FUND.


Under this Gold Chit fund, you need to pay a Fixed Sum of amount for 11 months and at the end of the 11th month, you are given the 12th-month instalment FREE by the Jeweller and as a Bonus offering, many also offer you Gold Jewellery with ZERO WASTAGE CHARGES.


In short, these schemes are EMI in Reverse. They help you buy Jewellery at a Future date by saving and accumulating.


The brochures show returns ranging from 10% to as high as 24% per annum.


Does sound good. Isn’t it?

Or is it?


Let’s find out...




Tanishq Gold Harvest Scheme

GRT Golden Eleven Flexi Scheme

Bhima Gold Tree Purchase Plan

Kalyan Dhan Samriddhi Scheme





1. Discount on Wastage. In fact, some jewellers offer ZERO WASTAGE CHARGES (Sadly, these ZERO wastages is only for a few select designs and for good intricate designs, the jeweller could still slam a higher levy).


2. Allows a simple effective way of accumulating large sums of money needed for Gold Purchase (like a monthly SIP in mutual funds)




1. These schemes do not have any Regulation and thus if the Jeweller goes bankrupt, your money is GONE!


2. You HAVE to compulsorily buy Jewellery even if the Jeweller does not have designs of your liking and also you will have to pay Making charges, etc.

The designs may not be of your liking but you are now STUCK


3. The Gold Savings scheme by Jewellers does not have SEBI approval and thus there is no monitoring of the cash you pay. These Jewellers may be using your fund for Working Capital, business, etc and nobody checks their books. So, if tomorrow, suddenly Gold price crashes and all Investors stop their instalments and ask for Gold, then you never know how many of these Jewellers would be able to keep their word.


4. Very few Jewellers offer 24 Karat Gold. Almost every jeweller offers only 22k gold. So, since you will not get cash from the Jeweller, you are buying Gold which is not 100% pure.


5. If at the end of the Instalment period, you are in need of Cash for an emergency, you won’t be able to use this money as you are given only Jewellery. The best you can do is to sell the piece of Jewellery and forgo the making charges.




Some Jewellers offer the choice of blocking grams of Gold when each monthly instalment is paid or the normal method of Amount Accumulation.

At the time of Maturity (redemption), you can choose which route works best for you (grams or amount route)

Our view is that:

In times of Rising Gold prices, grams work better and in times of Falling Gold prices, the amount accumulated works best.




Some jewellers like GRT do allow the purchase of GOLD COINS.

These schemes make sense only if you have a PLANNED jewellery purchase which matches the Maturity Month of the scheme. If you don’t have any plans to buy jewellery, don’t even look at these schemes.


And also, you can go ahead and subscribe to this Gold Chit fund only if you are comfortable with the fact that you have to buy Jewellery only from that particular shop.



If you do decide to go ahead with taking a Gold Chit, make sure you go with reputed Jewellers as many Fly-By-Night Operators have vanished after collecting crores of rupees (VGN Jewellers, etc)

Jewellers like Tanishq, and GRT have a good reputation.


And of course, as we always keep saying, GOLD IS NOT FOR RETURNS. There are many better options for Investments which are superior to Gold when it comes to Returns.


You can also consider other options like the Gold Mutual Funds and the best of them all namely SGB.

SGB is Sovereign Gold Bonds. SGB gives 2.5% interest with a 5-year lock-in period.

And SGB is backed by 24k Pure Gold.



But, Sir, the 12th-month instalment is FREE. What about that?

Well, Jewellers are not here for charity, they give FREE last instalment with money made from your previous instalments!

Jewellers not only earn interest on the buyer's instalment but also sell the jewellery after earning a handsome margin. For 20 grams of gold jewellery, he earns Rs 600 making charge and sells 22-carat gold at a rate of 24 carat gold. So, he earns approx. 8% extra by selling gold of 22-carat purity.

For jewellers, this scheme is a win-win situation as he gets the chance to sell their product, and at the same time, he earns interest on the customer’s instalment.


For lower middle-class people, and for people who want to accumulate Gold for marriage or other purposes in near future, the Jeweller Gold Saving Scheme looks okay, but for all other purposes, the SOVERIGN GOLD BOND by the Government of India is the BEST.

THE BIGGEST ATTRACTION for me is that this SGB gives me Interest of 2.5% every year (on base value) and mirrors the prices of the Market Value of Gold.

Neither Gold Chit Funds, Physical Gold, Gold Mutual Funds or Gold ETFs pay any Interest.

For a Gold lover, SGB is a GOD-SENT WINDOW to invest in Gold (especially as it is GST-free too!!)



If you are hell-bent on investing in these schemes of Jewellers, then I feel that Tanishq and GRT are better among the Worst.



Most investors invest in Bank Recurring Deposits to buy Gold at a future date. This is not a good idea since Interest Rates may not keep pace with the rise in Gold prices and they will not be able to achieve their objective.



Gold Jewellery Schemes aim to give you Gold/Jewellery whereas gold Savings Funds/Gold ETFs aim to give you Cash.

So, if you want to buy Jewellery in the near future (say 1 year), then go for Jewellery Gold Savings Schemes, but if you want to buy Gold as an Investment or if your Gold usage is at a later date (say your daughter's marriage, which is several years away), then it's Gold Savings Fund/Gold ETF blindly.

The caveat, if it is for consumption, then unless you have a very trusted and reliable Jeweller (ready to buy back from you), don’t think of these Gold Savings Schemes by Jewellery Stores.

Buy Gold ETF, Sell the Units when you want gold and from the money you get, go buy gold!



If you do have a Gold Chit fund, when you go to the Jeweller at the time of maturity (redemption) DO NOT reveal that you have a Gold Chit scheme, first select the Jewellery you want, get the estimated Bill and only after this REVEAL that you have a Gold Scheme!!


All the Very Best,

Srikanth Matrubai





All the best,
Srikanth Matrubai
Srikanth Matrubai, Author of the Amazon Best Seller DON'T RETIRE RICH

You are strongly encouraged to consult your financial planner before making any decision regarding this investment. The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.

Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH

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