An index fund simply copies a market index like the Nifty 50 — no fund manager trying to beat the market. You own a slice of India's largest companies at a very low cost. For most people building wealth over 10+ years, that is enough.
Nifty 50 vs Nifty 500
- Nifty 50: India's 50 largest companies — simple, liquid, historically strong long-term returns.
- Nifty 500 / total market: broader diversification including mid and small caps — slightly higher volatility and growth potential.
Why expense ratio matters
Good index funds charge 0.1–0.3% a year. Active funds often charge 1%+. Over decades, low fees are one of the few free lunches in investing. Always buy the direct plan.
How to start
- 1.Complete KYC on a direct mutual fund platform.
- 2.Pick one broad index fund.
- 3.Start a monthly SIP you can sustain.
- 4.Increase it with salary hikes. Do not stop in a crash.