Smart ways to accumulate gold for a marriage

Published: December 30, 2015 at 8:20 pm

“Which is the best way to  accumulate gold for a marriage?” is a question often asked by parents, brothers and even the bride or groom to be.  This is a discussion on a few smart ways to accumulate gold for a marriage.

Some of you are thinking, ‘the best way to accumulate gold is not to!’.  The importance we associate to gold is as personal as personal finance.  So let us address the issue objectively without a holier than thou attitude.

First, some basic ideas associated with gold.

  1. Investing in gold is different from accumulating it. Mixing the two is a common mistake, thanks to some smart marketing.
  2. Gold is not a depreciating asset.
  3. Gold is not a fixed income asset.
  4. Long-term from investing in gold has given about 8% return before tax. Therefore investing in gold is not a hedge for inflation. Accumulating gold is.

Method 1: Invest in a portfolio that can do better than gold

If you need the gold several years away (min 7 years and more more), a portfolio with a good dose of equity (about 60% or more for 10Y+ goals) has the potential to beat the returns from gold after tax.

The reasoning is simple. Equity approximately matches long-term GDP growth. This is about 14-15%. Even a return from equity of about 12% resulting in a net portfolio return of 10% should be enough to buy all the gold we want.

The second advantage with this method is that we are not accumulating gold. We are accumulating a corpus with which we can do as we please. Perhaps years from now, social norms would be quite different and gold will not be as important as it is now. Perhaps our children will grow to dislike it. In such event, the corpus can be used  in other ways.

This is the method of my choice. I will neither tell my children that I am investing for their future needs (until the time is right), nor will I invest in their name. This way, I retain complete control of the corpus. To me, this seems like the most efficient method to accumulate for gold purchase.

Method 2: Buy physical gold from time to time

Gold is not a depreciating asset*. So if the goal is to eventually buy gold, one might as well buy it from time to time, when the gold price dips.  I think the best way to do this is to buy jewels and not any other form. The mother can buy jewels for herself and pass it on to the daughter later on. Or purchase it straight for the daughter. She can bear the costs of refurbishing it or redesigning it out of her own pocket when she is able to.

Storing reasonable amounts of physical gold is not that big a deal as AMCs will make you believe. A couple of lockers will do the job.

If the goal is less than about 7 years away, this is obviously the preferred choice.

(*) Gold glitters because its electrons respond to external light and reflect it off.  When metals react with the atmosphere, a thin layer of oxide is formed which would make it look dull.  It is still gold. If all that glitters is not gold, then all that is gold does not glitter!

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

Ways in which one should NOT accumulate gold

1 Buy chits or use gold schemes of jewellers

A simple RD gives you all the freedom to make an annual purchase. A liquid fund allows you to buy on price dips.  A chit scheme or a gold schemes comes with constraints and are not regulated. It allows a jeweller some working capital to do as they please until the purchase is made. See no reason why we should do that.

2. Use Gold ETFs, Gold funds or the upcoming Sovereign Gold Bonds.

These are ways to track gold price and possibly take advantage of its volatility. These are investment methods. Not accumulation methods. If I wanted to invest for a latter purchase, I would prefer a portfolio which can beat gold returns after tax.  I will not track gold price electronically, expose my capital to fluctuations in gold price, pay tax and then buy gold with it.  Read more: Do not buy Gold ETFs because you need gold for your child’s marriage!

Personally I believe  gold has no place in an investment portfolio because the reward it offers is disproportionate to the risk taken: Investing in Gold is riskier than investing in Stocks!

Further posts on the subject:

Should gold be part of your long-term investment portfolio?

Charts: Equity vs. Gold. Vs. Debt

Gold ETFs and gold funds make sense only if I wish to diversify my investment portfolio.  Being in electronic form, they are not a hedge against inflation. Only physical gold is a hedge against unusually high inflation.

The argument that we invest in 24 carat gold via ETFs and buy 22 carat jewellery is not quite valid. As Ashal Jauhari pointed out, the ETF NAV is closer to 22 carat gold price due to expenses, tracking errors and liquidity issues. The true 24 carat gold is equity!

Do share if you found this useful
Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media

Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Do check out my books

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.


    1. I have not looked into its details, but I see no need for such plans. If I have money, I will buy physical gold each month.

  1. What is your opinion about accumulating for marriage goal in terms of gold coins instead of jewellery form? Any specific issues associated with that approach? Is their liquidity suspect? Or, the conversion-to-jewellery entails significant losses?

    1. If the coins are going to remain coins then it is a good idea. If they will be converted at some point, then you need only money to do so and not gold and yes in this case liquidity is not easy.

  2. Why do you think that electronic gold is not a hedge against inflation ? Afterall it tracks 24k gold in real time right ? Above all the we don’t need to bear all the locker expenses (apart from the fund house expense). Kindly give me some insights on this.

    Thank You.

Leave a Reply

Your email address will not be published. Required fields are marked *