Religare Easy Gold plan Review

At the time of recession many investors lost their fortunes in the stock market, it was the retail investors who took the hardest hit. Individual stocks, mutual funds, bonds and IPO’s none of those were working for them. For corporate houses the situations even worsened when they found that there were no takers for their offerings to quote with an example EMAAR MGF had to take back its IPO due to low subscription rate.

I was also one of those investors who is no more interested in getting into the stock markets again and is looking for a good and stable investment options for almost a year now.

Thanks to the tele-callers, who do not obey the NDNC list gave me a call to advertise their new investment product. The caller was representing the Religare easy gold scheme, normally I do not entertain tele-callers but he was speaking something which was related to investing in gold.

Investing in bullion market is one of the hot investment options nowadays; the demand for gold and silver has been rising constantly and is giving an average rate of return ranging from 15 to 30 Percent year on year basis.

I told him to brief me about the plan, and as per his explanation the plan is as follows.

Religare under its easy gold plan is selling 10,20 (10+10), 50 and 100 grams gold coins and bars which have 999 purity and are 24 carat gold certified by MMTC or LMBA on equated monthly installments

Here is the excerpt of our telephonic conversation

Tele-caller: Good evening sir, I am calling from Religare, I would like to speak to you regarding our new offering which is Religare Easy gold plan

Me: I am not interested in any investment options at present, thank you for calling me.

Tele-caller: Sir, please give me a minute of yours, this is not an ordinary investment option, under this option we are selling gold at present day rate and for which you don’t have to pay the full price.

Me: is this a gold ETF kind or something similar

Teler-Caller: No Sir, let me tell you the plan, under Religare Easy gold scheme you can buy the gold at today’s rate and can pay the total price of the gold in the equated monthly installments

Me: Ok, so if I say that I would like to buy the 100 Grams of gold, you would sell me that gold at today’s rate and I do not have to pay full amount right now instead I can pay the whole price in the form of EMI’s.

Tele-caller: Absolutely correct.

Me: as per you what is the today’s rate of gold

Tele-caller: we are selling 10 Grams of gold at Rs. 26282 (at the same time I searched the rate for gold it was at Rs. 22317)

Me: The present rate for gold is not 26K its 22K something.

Tele-caller: Sir, we are selling Swiss gold which is with 999 percent purity and 24 carat gold certified by MMTC.

After listening to this I asked him to send me their brochure or tell me their website where I can browse the details of the plan

Agent was not able get the required information, neither his manager, it was the senior manager who called me and said to search for Religare Easy gold Plan in Google, where you will find the link named Lock the price of gold.

Me: Ok, I will search the plan and will let your agent know regarding my decision

Sr. Mgr: Sir, I do not hide the fact that I am selling you gold at higher rate, but when you go to market and buy an Alto you will get a re-sale value of Alto and if you are buying accord you will get the re-sale value of accord.

I don’t know what mathematics he did to get into to find the relation between buying gold and buying accord.

After dropping the call, I did some research and found out that, there was margin of approx 15% on the gold they were selling which was in the same lines of bank gold coins and bars.

By adding EMI option into this they are trying to increase the sale of gold coins and bars even tough when there is no actual requirement, which is giving them two benefits one they are selling gold for which they would get commission second the margins of on selling gold.

After buying and to attain a set percentage of actual profit on my investment, I have to overcome their margin plus VAT on the transaction.

For Eg: The rate of the gold per 10 grams in 20,000 he would sell me at margin on 15% which will bring the total to 23000 add to that one per cent VAT (changes from state to state) 230 so the total cost for me would be 23230. Till the price of 23230 I am at loss or break even and if the rate goes above 23230 it is a profit for me.

But there is one more catch, the actual delivery of gold would be done once you complete paying your installments or at least reach the 60% of the payment, if you are not able to pay your installments the company would deliver the gold of the amount which you have paid till date in the form of EMI’s.

They do not have buy back option, they say there is a high level discussion going on but at present there is no buy back option available.

They also say the as we are selling Swiss gold and if one goes to local shop to sell the gold he would automatically give 10 percent extra on the rate which would be at date.

One no jeweler would give 10% extra if he is buying, he would buy at the market rate, certifications does not matter him as the rate which we see daily is for 24 carat only.

If you give 24 carat gold to the jeweler to make some ornaments then he will give you extra on the rate for the coins or bars. The reason being ornaments are made out of 22 carat gold, so he will add some metals to convert your 24 carat gold to 22 carat gold

If anyone is really looking to stock gold this is a better option but not a good investment plan. This scheme is ideal for those parents who are looking to save some money to buy gold during their child’s marriage.

But for people like me it is just another tele call which one can ignore, the simple reason being I would not pay 16% (15% + 1%) as cost where I think the annual rate of return would be around 25% to 30% and if I minus the inflation (taking approx 10% figure) I would be left with 7 to 9 % rate of return for my investment.

  • Sunil

    Thanks for this post. 

  • Sunil

    Thanks for this post. 

  • Jbismi

    Your analysis about funds are very informative, Thanks for sharing your knowledge. Your advise is worth dollars. -j.bismi

  • anees

    there is so much chemistry behind investing it. thanks for your analysation.

  • Sclient

    Very good analysis. I have been looking for this kind of articile for the IRR calculation. I did not know the specific overhead costs they charge until i read this article.
    Keep up the good work

  • nirmala

    good analysis was needing this analysis 

  • Kunjumonjoseph

    I happened to invest in this plan and am a really worried person now. I locked 100gms of gold, paid the initial amount an the rest of the EMI’s are going from my bank for the last 6months. What worries me is that I till date have not got any receipts from them except a letter initially when I started stating my plan and the EMI amount I have to pay and their terms and conditions. There is no way I can contact them. Even their web sites don’t show any contact numbers. Once I even got a call from some costumer care office telling me that some of my payments are due. I checked with the agent from Bajaj capital who made me join this plan and gave him my bank statements. He checked out and told me everything is OK. He tells me that they normally don’t issue any receipts. Or may be it is send to my permanent address where I am not staying at present. I am worried and am getting a funny feeling that I am being duped. Can any one give me a clear picture.

  • Sai

    I really liked d way u have explained everything. Good work

  • Ganesh

    Kindly be aware that the gold scheme is in a mess, i have ended my last emi pmt on Aug and still not recieved my coin and doing a lot of follow ups everyday. No contact numbers, if you contact on the helpline they will say they dont have idea about the gold scheme and mail on the email id provided. email id takes almost 4 days to reply, with same stupid answers, there is no branch in mumbai also

  • Saket

    Good Research!!!