Buying Rs 1L gold jewelry for my newborn's future: Is it actually a good investment?

Question

Just had a baby girl and want to start accumulating gold for her future.

Planning to buy Rs 1L worth of 22k jewelry every year.

My parents say gold always goes up, but I am wondering if buying physical jewelry is the most efficient way to invest this money over a 15yr horizon.

Sachin Kabra · Accepted Answer

The moment you walk out of a jewelry shop with that Rs 1L necklace, you are already sitting on a loss of more than 17%. Let us break down the exact math on a Rs 1L purchase when the market price is Rs 8k per gram. You might assume you are getting Rs 1L worth of gold, but you actually receive about 10.2 grams.

The rest of your money is immediately eaten up by hidden costs. You pay making charges of around Rs 10k and wastage charges of Rs 4k. Then comes the 3% GST on the gold value, which is about Rs 2.4k, plus additional GST on the making and wastage charges.

Even a small BIS hallmarking fee is added to the invoice. Ultimately, you pay Rs 1L but receive 17.3% less actual gold than anticipated. You are not walking away with Rs 1L of gold; you are walking away with Rs 1L of gold jewelry.

If your objective is to build wealth and fund a child's education, you must choose the right financial vehicle to optimize your ROI. You buy financial gold to build wealth, but you buy gold jewelry to build memories.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

Buying Rs 1L gold jewelry for my newborn's future: Is it actually a good investment?

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