Buying Gold in daily SIPs? A Checklist

Buying Gold in daily SIPs? A Checklist

Gold prices are on a roll once again and some analysts believe they could touch Rs 35,000 per 10 gram by the end of this year.

Should you invest in the yellow metal at these levels? What if the price corrects in a few months? A new gold saving plan promises to take care of the price concerns for small investors.

The Reliance My Gold Plan launched last week by Reliance CapitalBSE -0.27 %, in partnership with the World Gold Council, is a monthly saving scheme, which allows the investor to buy gold in 20 instalments during a month.

"It's just like a daily SIP for buying physical gold," says Amresh Acharya, head of investments at the World Gold Council. "The investor buys gold at the daily average price, which smoothens his purchase price and cushions him against volatility," he adds.

Small is convenient

If you are buying physical gold, isn't it better to just go to a jeweller and buy it yourself?

The problem with physical gold is that you have to shell out making charges and buy at least a few grams of the precious metal. In the Reliance My Gold Plan, you can save as little as Rs 1,000 a month. If you invest Rs 1,000 a month, the plan will buy gold worth Rs 50 for you on every working day.

"In this way, the investor is buying physical gold in micrograms," says Acharya. You may not be able to get anything for less than Rs 1,500 at a jewellery store. Even a 500 mg trinket would cost around Rs 1,650.
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