Why should you invest in index funds?

The index funds are usually created based on detailed research. The process in which the stocks are selected is completely transparent. The entire work is managed by a team that comprises professionals. Special mention needs to be made of the Nifty 50 index. It is a highly diversified one comprising the top sectors as well as the best companies across those. The portfolio in these cases is recreated after 6 months each. It is also rebalanced after every 3 months. Here every company needs to have equal weight. This is why if any company attains a higher position because of exceptional performance the entire index is rebalanced so that it becomes equal. In fact, profit booking is also done in the same way in these cases. 

You can save money 

Let us say you want to invest in each of the Nifty fifty stocks individually. That is going to cost you 1.5 lakh rupees in all. However, when you do the same thing through an index fund you can do so by spending much less money. Every index fund offers you low expense ratios – this is a characteristic of these funds as is the low turnover. It also helps that so many companies these days are starting these index funds tracking the likes of the Nifty 50 index.      

You can start with smaller amounts

In these cases, you can start investing with as low as 500 rupees. You can invest in any way you want to – you can invest through a SIP (systematic investment plan) or in a lump sum. However, experts say that it is always better to take the SIP route. This is especially applicable when the market is at its peak. Your investment attitude in these cases must also be like what you would do if you were investing in an equity fund – you must be in it for at least 5 years.

Investments are subject to market risks and this common knowledge. This is why you must invest through proven service providers such as 5paisa. They provide you highly critical services such as Nifty 50 stock live information. This way it becomes so much easier for you to take the best possible decisions for your investment. Remember that this is your hard-earned money that we are talking over here. Of course, investing in Nifty 50 is safe because it has the best performers in its kitty. 

     

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