Now one more plan added to the list of gold schemes where you have only option of redeeming physical gold but luring people as if the gold investment. This time it is from Reliance Money Precious Metals Private Limited (RMPM) and the name of scheme is “Reliance My Gold Plan” Let us look at it’s features and to whom it is beneficial.
World Gold Council is the marketing associate of this plan. It will assist RMPM in marketing and promoting the product. RMPM is the separate entity of Reliance Money. RMPM is the part of Reliance Anil Dhirubhai Ambani Group.
1) Minimum monthly subscription Rs.1,000 and in multiples of Rs.500.
2) Resident Individuals including minors, HUF and NRIs can invest in this plan.
3) Scheme tenure will be 12/24/36/48/60 months.
4) Lock in period will be 6 month from the initial subscription. Now no premature termination fee on fulfilling your accumulated gold grams post 1 year. Post lock in, pay the residual amount for a cumulative subscription of on year without any charges.
5) Charges-administrative charge 1.5%, pre-termination charge-2.5% of accumulated amount and safe keeping charges 0.5% per annum on the total subscription amount.
6) Delivery will be in terms of gold coins ranging from 0.5/1/5/8/10/20/50 grams or in the forms of jewellery.
7) In case of any unforeseen event, you can liquidate part of your accumulation. Subject to minimum fulfillment of 5 grams, you can make partial fulfillment and continue the plan.
8) Purity of gold is 24 Karat Gold of 995 fineness. Such Purity has only been achieved by the refiners based in Switzerland. Fineness is the measure of the purity of the metal that was used to make the coin. It is usually expressed as parts per 1000. Percent Purity is the measure of the purity of the metal which is expressed in Percent terms i.e. parts per 100.
Gold Purity is usually measured in Karats ranging from 18 Karat to 24 Karat. In terms of Purity 18 Karat translates to 75% purity and in terms of fineness it translates to 750 fineness.
The relation between Karat and Fineness is described below:
1 Karat = 1000/24 Fineness. So, 1 Karat represents 41.6 Fineness.
Hence 24 Karat represents anything between 958 Fineness and 1000 Fineness.
So, a Gold Coin with 960 parts of Pure Gold and balance 40 parts of Copper is also 24 Karat Gold and a Gold Coin with 980 parts of Pure Gold and balance 20 parts of Silver is also 24 Karat.
9) Daily Averaging-Each subscription amount received from the customer is divided into 20 equal Daily Purchase Amounts and Gold Grams up to 4 decimals are allotted by dividing each Daily Purchase Amount by the Gold Price (inclusive of Administrative Charges) on each business day. By allotting grams on the basis of Daily Averaging the price volatility of Gold is minimized thereby insulating the customer from the price volatility.
10) Making Charges-Making charges are as below.
11) You cant hold this account in a Joint Account and you can’t increase the amount in between the scheme tenure.
12) Nomination is mandatory to this scheme. You can change nominee afterwards also.
Review:-As I told in the first line of this post itself, this scheme is mainly meant for purchaser of gold but not for gold investors. Reason is, your redemption will be in the form of physical gold but not in the form like ETF, E-Gold or Gold Mutual Funds. Especially when you redeem in the form of jewellery then your invested money value will again decrease in the form of making charges and wastage.
Pricing will be high compare to E-Gold or MCX. Reason they are stating is, MCX is totally a future market hence not fair to compare with MCX price. But when it comes to E-Gold of NSEL, they stating that price will not include landing price. So you need to fetch more than the actual gold price available in E-Gold or MCX.
In one way government have a concern over gold investment and recently RBI too banned all loans which promote gold investments but these schemes are attracting retail investors to invest in gold. Strange to say that regulators are not eyeing on such schemes. Reason is, this product is neither a collective investment pool like mutual funds nor a Deposit. Hence it will not come under either RBI or SEBI. So this product is totally out of any regulator purview. Hence you need to believe on the company and need to invest. This may seen as a bit risky for few people.
This plan using the way of investment which I say as “SIP in SIP”, means you are paying your monthly contributions as a monthly SIP but in this plan, this monthly contribution again will be divided into 20 market days of a month and will be purchased accordingly. Hence in your monthly SIP again cost averaging will effect with dividing of 20. This is the only unique way I found in this scheme.
This scheme looks like concentrating on retail investors who can easily afford by subscribing with as less as monthly Rs.1,000. But to make you caution, this scheme not called as an investment instead you may say that easy way accumulation of your physical gold need. Hence it is a big no from my end if you are thinking of gold investment.