Valuation of Tanishq Gold Harvest Offer

If you are in India and watch Television, then you surely must have watched this ad –



The ad is targeted towards working women who take charge of their lives and planning their future on their terms. The ad which is timed brilliantly is launched in sync with the India International Jewelry Week, talks to the right sentiments, however the product itself is questionable.

Tanishq Gold Harvest Offer is a scheme where one has to make 11 monthly payments and at the end of the year, you get the same value in jewelry. At a first glance, I thought that the financial returns amount to roughly 8% of the investment. Turns out that I had valuated it in the wrong way from the start itself, the formula to be used should have been XIRR, and it gives a 15% return.

Jyothi, our resident content creator then pointed out that it’s a loss making investment. Consider the inflation of gold (or the Indian Rupee for that matter) over the period of one year, and you end up with a loss-making product. Average Indian Consumer, beware of this product!

4 thoughts on “Valuation of Tanishq Gold Harvest Offer”

  1. what happens if gold prices drop / inflation flattens?
    what happens if the consumer continues with the scheme over a fairly long period instead of just 1 year?
    I think more than the time period, inflation etc, the other charges like making charges etc. would be the real problems here?

    1. Hey Bakshi, long time no see :-)

      hard chance of the gold prices dropping.But if it DOES drop, then it can be an attractive offer, no? If inflation flattens, then the returns go down (since the value of money is not going down, and the incremental gain that you would otherwise get from making monthly payments is not there).

      Did not quite get your point about making charges, are you talking about craftsmanship charges? I was discussing this with my mother, and she informed me that the premium Tanishq charges for craftsmanship is way higher than the ROI they are offering. So, you are in fact better off buying gold yourself (from the SBI Gold Branch, and giving it to a trusted jeweller who can craft it as per your specs.)

      1. Dunno about gold prices….Read Buffett’s take on gold last year…lotsa common sense and simple logic….

        “You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?”

        Good advice from your mom:-)
        But, if you are keen on investing in gold,  going for a Gold ETF would be the best way to invest.

        1. Nice point. I will take that 67 feet cube of metal, and then hold the US treasury for ransom :-) … ala Goldfinger in the bond flick ;-)

          Yes, Gold ETF is a good idea, in fact 6 months back it was doing very well. Dont know abt the exact returns now.

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