Buying gold in instalments? Do this to avoid disappointment.
Gold savings plans promise an easier way to buy the precious metal by spreading out the cost over a year or more. But some types of plans have left investors short of their goal despite months of saving as gold prices have surged over the past year.
Madhumita Shukla, an employee at an IT firm, was excited to redeem the units in her gold savings plan, bought at a jewellery store, for which she had been saving for a year.
“Last Diwali I couldn’t buy the ₹81,700 pendant set I wanted as the price of gold had risen significantly. So I chose the advance gold purchase plan. Even though I saved for the whole year, the money is still insufficient to buy the set as it now costs more than the ₹1.17 lakh I was able to save.
Madhumita isn't alone in this. Many others who invested in gold savings plans offered by jewellers have been left wanting as gold prices have surged 58% in 2025 and 67% since last Dhanteras. Despite this, the lure of savings plans with embedded discounts – usually a percentage of the installment you pay – has kept buyers hooked, and jewellers lining up more such deals.
Of the 15 jewellery stores this author visited, nine had the same rehearsed pitch, offering the ‘added advantage’ of being able to redeem the units for gold coins and bars. “Why don’t you opt for our gold accumulation plan? You need not buy jewellery, you can save for gold bars or coins too," one salesman said. This pitch seems to be working, with a 25% increase in adoption of jewellers' gold savings schemes, according to some jewellers in Mumbai we spoke to.
But should you invest in such schemes? To help you decide, we lay out the various plans on offer and the fine print that may make these deals a lot less lucrative than they seem.
Fixed amount monthly plan
Jewellers typically offer gold savings plans in two formats. The first is a plain monthly savings plans under which jewellers allow customers to pay a fixed amount each month and use the accumulated savings to buy gold.
Madhumita bought into such a scheme and put away a fixed sum every month, but since her savings weren't tied to price of gold, she found herself wanting even a year later. “The rupee-based gold accumulation plan offers only the last installment (or a portion of it) worth of return on investment, even while gold prices shoot up faster. Even though one saves each month, rupee-cost averaging doesn’t work well here as one doesn’t benefit from any correction in the price of gold unless it happens at the redemption stage," said Rajiv Popley, director of Popley Group of Jewellers.
Fixed grammage monthly plan
There is another gold accumulation plan, in which you buy a unit of gold at the market price each month, which helps average out the cost. The amount paid each month therefore varies in such a plan.
These schemes help buyers avoid rude shocks when buying jewellery at the end of the saving period as they get the exact grammage they were anticipating.
Neil Sonawala, managing director, Zen Diamonds India, said, “In other market schemes, customers are forced to buy jewellery upon maturity. In Zen Diamonds’ plan, you buy gold every month, and at the end of the term you have the option to redeem it or keep it as savings."
While Popley's gold accumulation plan doesn't offer any waivers, Zen Diamonds' plan offers benefits if the customer chooses to redeem the gold for jewellery.
Credit card EMIs
Why not buy jewellery using your credit card and pay it back with a card-linked EMI plan? Well, the EMI conversion will attract processing charges and a merchant fee of 2-3%. Also, the ‘bonus units’, discounted price, or special offers won't be available if you use a credit card, because of the additional charges the jeweller will have to bear. “Half the making charges will be lost in the merchant fee alone and that would affect the business margins," said Popley.
Discounts and bonuses
Bonus offers earlier extended to 36 months or more, with interest offered for parking the money with a jeweller. That was until the corporate affairs ministry introduced rules restricting gold accumulation plans to 12 months. Also, no interest can be offered on accumulation plans. Thus, jewellers now offer a bonus or waive off the last installment and call it an advance purchase plan.
Jewellers also have a restriction on the total amount they can collected under such schemes – it should be less than 25% of the jewelller's net worth.
Accumulation through digital gold
Another new option is investing in digital gold accumulation plans using apps of small jewellers, created by small tech firms. “An app to offer digital gold can be built in a week for as little as ₹7,000," said Sanju Khushlani, founder and CEO of InstaLaxmi, which offers app creation services to jewellers.
In these schemes, you can buy gold units via apps but don’t have a way of finding out where the gold is stored. While marquee jewellers use the services of gold refiners such as MMTC-PAMP, SafeGold and Augmont to facilitate buying gold and storing it in a vault for up to 10 years, local jewellers offer only a receipt or a digital entry on their app. There is no assurance of a custodian keeping to gold safe.
If the jeweller decides to flee with the funds, there's little customers can do. State-level laws to protect depositors lack teeth, as seen in the Goodwin Jewellers and Pranav Jewellers scams.
And though the union government passed the Banning of Unregulated Deposit Schemes Act in July 2019, restricting gold accumulation schemes to 12 months, many jewellers still offers scheme of up to 36 months as they aren’t publicly listed firms and therefore not under the purview of the corporate affairs ministry.
Regulatory cracks
While gold jewellers need to adhere to hallmarking norms and restrictions on gold savings plans, this has not been mandated yet for digital gold offered by jewellers and e-commerce platforms.
However, the Securities and Exchange Board of India has barred stock exchanges, stock brokers, registered investment advisors and distributors governed by it from promoting or offering digital gold in their basket of products in October 2021.
Despite these regulations, Aditya Birla Capital lost the digital gold units of 465 customers worth ₹1.95 crore to a cyberattack in June. And in late 2024, consumers who bought digital gold on Paytm complained that they didn't receive their funds after selling the units, while others weren’t able to track their units on the platform.
Conclusion
While digital gold offers convenience and lower prices, and does away with purity concerns, it is not a safe form of investing because of a lack of regulation. With the government restricting fresh issues of sovereign gold bonds, regulated products such as gold exchange traded funds and multi-asset funds, which offer diversification, may be a better choice than unregulated products such as digital gold.
topics
