Reliance My Gold Plan: Understand the fine print and your alternatives
Reliance My Gold Plan is an innovative product to create a gold SIP on a daily basis with redemption option of 24k gold coin or jewellery. While it is an alternative to jeweller gold savings schemes you need to know its drawbacks, too
Reliance My Gold Plan (RMGP) offers an advantage of low minimum monthly investment of Rs1,000 which is invested by a systematic investment plan (SIP) into gold purchased across 20 business days of a month. It means you can get a daily cost averaging of gold with only Rs50 everyday investment. Gold of 24K 995 fineness will be allotted and up to four decimal points rounded grams will be credited to the customer’s account. The product does not need a demat account.
The plan can be subscribed for a tenure ranging from one year to 15 years. Redemption is allowed in the form of 24K gold coin or jewellery at specific outlets after paying making charges and VAT. RMGP competes with Gold Savings Schemes (GSS) from jewellers. While most of the jeweller schemes only allow gold purchase at the price that is offered at end of the term, Gitanjali group offers Swarna Mangal scheme which allows you to lock with the gold price at each instalment payment. Swarna Mangal scheme offers a carrot of 30% discount on making charges of the jewellery that you purchase; it does not give option of gold coin/bar purchase.
RMGP is launched by Reliance Money Precious Metals Pvt Ltd—a Reliance Capital company and World Gold Council. It is not a regulated scheme. While this may be the biggest disadvantage, the safety of RMGP gold is little better than a jeweller shop. RMGP gold is kept with Lemuire Secure Logistics Pvt Ltd and IDBI Trusteeship Services Ltd has been appointed as the security trustee.
Bullionindia.in, which was recently launched, claims to offer gold and silver trading at wholesale prices. Its features include no storage, no account opening, no brokerage charges for buying and selling as well as no need for a demat account. It too offers physical redemption option after paying delivery charges. It is promoted by NCDEX Spot Exchange, RiddiSiddhi Bullions and Finkurve Financial Services. While it may not allow SIP creation, customers can do it themselves as gold can be purchased in a low denomination of 0.1 grams.
Bullionindia.in pricing for per gram gold as of 18 December 2012 is Rs3191 (inclusive of VAT), while RMGP gold pricing is Rs3329 (excluding VAT). Both of them offer 24 K 995 fineness gold. Bullionindia.in is also unregulated; it can be considered as competitor to RMGP.
Here are the pros and cons of RMGP
- • It offers low entry level of Rs1,000 per month and in multiples of Rs100 thereafter
- • It allows systematic gold accumulation with subscription split into 20 daily purchases taking away risk of timing the markets
- • Customer’s account is credited with 24K gold of 995 fineness up to four decimals of gram
- • It allows redemption in 24K gold coin or jewellery after paying making charges and VAT
- • RMGP gold is kept with Lemuire Secure Logistics Pvt Ltd and IDBI Trusteeship Services Ltd has been appointed as the security trustee
- • Pricing of gold is higher than that offered by Bullionindia.in
- • It is not a regulated scheme
- • The plan can be subscribed for a tenure ranging from one year to 15 years. There is a lock-in period of six months after which you can claim gold in the form of coins or jewellery, but premature termination charges of 2.5% apply
- • There will be administrative charges of 1.5% as a mark-up on the daily gold price
• It does not offer trading of gold. You have to take physical delivery at the end of the term. There is no option of redeeming in cash. There will be 0.5% safe keeping charge if you don’t take delivery of gold after six months from your maturity or issue of fulfilment voucher
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