Do your gold purchases early

Indian marriages are referred to as “big fat weddings’.  This title has not been given for any other reason, but simply because of the amount of money Indians spend at weddings. Marriages are a one-time affair and hence it’s a time to flaunt the prosperity and wealth that one has. It is not possible to imagine an Indian wedding without gold jewellery. And that is why many people start buying gold, even when their kids are young to plan for their weddings in the future

Early Gold Investments

As mentioned above, weddings in India are a costly affair. That’s why as soon as a married couple has kids, they start planning for that. One way is to start saving money for the marriage and putting that money in a savings account, RD or FD. However, the return offered by these methods is very less and hence not advisable. Also in times of uncertain economy like today, where the money inflow is under question, saving money for the wedding of your son or daughter can be very tricky. Also, when you go to buy gold in bulk, you would be surprised by the gold rates, and buying gold can be a huge financial burden.

What’s the way out?

As is true in most cases, the key to tackle this problem is to start planning early. We all know that our kids will get married at some point in time and the gold rates are always going upwards, in the long run. And since expense on gold jewellery is a major chunk of marriage expenses, it is critical to start planning early. 

How to plan early?

If you look back in history, the gold prices have always gone up and with that, your early investment in gold is indeed a good step.

Start investing in gold jewellery in small but regular installments in advance. The sooner you start, the better it is. As the amount to be invested will be lower in that case. This way over a while, you would have a sufficient amount of gold which can be used for making jewellery. This can easily be done through a 4 step process as given below.

1) Decide on the quantity of gold to be bought for the wedding.

2) Calculate the time frame available to accumulate gold.

3) Convert this time frame into small but equal intervals, say monthly.

4) Divide the total requirement by the number of months to find out the amount of gold required every month.

5) Start investing in gold every month in small quantities.

Let’s Take an Example to Understand This, More Elaborately

Let’s assume, we have a couple, Amit and Disha, who has a daughter, Diya. As of now, Diya is 3 years old and her parents feel that Diya will get married once she completes 26 years. Now, going by the step-by-step process given above, here is how the couple can decide on their plan to accumulate the desired amount of gold for the wedding of their princess.

1) Let’s say the couple decides that they want to give 20 tolas (250 grams) of gold to their daughter at her wedding.

2) Now, since Diya is currently, 3 years old and marriage is planned not before 25 years, they have a window of 22 years to accumulate this amount of gold.

3) Convert 23 years into equal time durations; we have 276 months (23 years X 12 months). 

4) Dividing the total quantity of gold required (250 grams) by no of months (276), we get 0.9 grams. Which by the rates prevailing today works out to be close to Rs. 5,000 per month (Rs. 50,000 per 10 grams).This is the amount of gold that they need to buy every month for the next 23 years and they would be able to get the desired amount of gold without any burden.

Conclusion

Gold jewellery is a part of every Indian wedding without which we cannot imagine a marriage. And like any other thing in life starting early always helps. Since gold rates are always moving up, it makes great sense to start investing in small amounts so that buying the gold in one shot does not become a burden later on. One can invest a small amount every month into buying gold, which will not only reduce your burden but also give you good returns.