Furthermore, the costs are as low as 0. Therefore, one can buy it during trading hours in a day. Investors can react to an opportunity quickly and even place limit orders. The nature of Nifty BeES itself attracts liquidity. For example, from investor buying and selling, arbitrage by authorized participants with the underlying shares, and arbitrage with index futures.
The trade volume is significant hence offering good liquidity to the investor. There is no fund manager bias for this ETF. Therefore, offering a good spread of risk and diversification. Through this long-term, investors do not bear the cost of short term trading unlike other open ended mutual funds.
In other words, it insulates the long-term investors from short-term trading activity. One can invest in Nifty BeES through their trading and demat account. Just like purchasing equity securities stock , one can buy Nifty BeES. Unit holders can buy and sell anytime during the trading day at the prevailing market prices.
Furthermore, these transactions attract some brokerage fees similar to that of buying equity securities. One can invest in Nifty BeES either through the lump sum or systematic investment plan route. For lump sum investing, the investors have to buy the units at real-time price.
Lump Sum investing is often preferable when markets are corrected cyclically. While for SIP investing, investors can pick a date and start their monthly instalments. SIP investment provides an opportunity for the investor to make an investment at every level of the market.
The mutual fund invests in 50 different companies, and therefore, when investors buy one unit of an ETF, they get instant diversification and hence spreading the risk.
Also, investing in Nifty BeEs is very economical as the expenses are limited to 0. It trades on the NSE and hence is very convenient to buy and sell, and it is also very liquid.
Moreover, Nifty BeEs follows an in-kind mechanism of portfolio creation and redemption. Hence it protects long term investors from trading activity and additional costs of short term investors. Therefore they can be considered as a good investment. Giving dividends to its investors depends on whether the scheme is having surplus funds available or not. Trustee of the scheme often takes the decision of dividend payouts, dividend amount and frequency.
Dividends are paid to the investor after deducting the applicable TDS taxes. Usually, the dividend is paid within 30 days from its date of declaration.
Furthermore, once the dividend is paid, the NAV of the scheme shall be reduced by the dividend amount and the dividend distribution tax DDT amount. Since the mutual fund invests in equities, it is a volatile investment. Moreover, the companies in which Nifty BeES invests are large and stable companies. These companies have a strong track record.
Furthermore, Nifty BeES offers good diversification to the portfolio. However, it is important to note that mutual fund investments are subject to market risks. Hence, do not guarantee any returns. Short selling means selling shares that the investor does not own like the shares borrowed from a brokerage. Yes, you can buy Nifty for the long term through ETFs. You can invest in Nifty BeES through a demat account. It is similar to investing in stocks. If you invest directly in stocks, one of the significant challenges is the amount of money you require to replicate the NIFTY 50 index.
You cannot buy a fraction of stocks in India, which means that you must purchase a complete stock and not a part of it.
This means you will have to deploy a considerable amount of money to buy all the 50 stocks in NIFTY Suppose you want to invest Rs. Now, one stock of Nestle would cost you more than Rs. So, if you buy one stock for each of these two companies only, you would cross your monthly limit of Rs.
Besides vast amounts of money, you will also need to buy all the 50 stocks according to their actual weightage in the index and keep up with the weightage that changes daily. This is a highly time-consuming exercise. Because the weightage of stocks varies with the rise or fall in their value, and you will need to make the changes in your portfolio daily to replicate the index.
Low Investment Amount — Since index funds pool money from several investors, Mutual Fund companies allow you to invest a smaller amount of money. You can start investing with as low as Rs. You can increase or decrease the amount you are investing at any time you want and by any amount you want. This makes the process of investing extraordinarily convenient and hassle-free. Thus, there is no need for a team of analysts and researchers to help the fund manager take tactical decisions such as which stocks to buy, when to buy, when to sell, etc.
Moreover, there is no active buying and selling of stocks. As a result, this translates into low fees for you as an investor. Any increase or decrease in the weightage of a stock is done by the fund manager. The fund manager has a defined mandate on which stocks to buy and how much to buy.
This process removes the human bias while making investment decisions, and the fund can be an excellent addition to your portfolio. So you give yourself a great chance to accumulate enormous wealth in the long run. A FREE assessment that tells you what kind of investor you are, your risk tolerance levels, and a lot more. Dear Srikrishna, thank you for your question. However, it is always advisable to use a SIP instead of making lumpsum investments when investing in any Equity Fund.
Dear Bhashit Gupta, thank your for your question. There is usually not much difference between returns of different NIFTY 50 Index Funds as all of them invest in the same set of stocks and try to replicate the same index. But in case you want to still find one that has performed slightly better, you can check the ETMONEY Rank of different funds on the website or App and select one that suits your investment goals.
Is this the right time to invest in nifty 50 index funds, Since they are high? Hi Maria, The best time to invest was 10yrs back. And the next best time is today. As long as you do regular sips, you should be good to start anytime. Dear Rajesh, thank you for sharing your thoughts. We agree with you completely. Trying to time markets actually can end up destroying a lot of wealth in the long term than creating it. This is what we have explained in our blog on Time and Patience.
Dear Maria, thank you for your question. Many of us try to time investments and often wonder if the market is too high. Having time and patience are a lot more important than trying to time your investment. You can read our blog on Time and Patience for a better understanding why these are the most important assets that any investor can wish for. Dear Krishnan, thank you for your question.
So we would suggest this as a starting point for better understanding of how investments work. Beyond this there are numerous personal finance websites and magazines that you can read to gain further knowledge on how to progress on your investing journey.
Thank you for the kind words, Abhinanda. Sir I want to know that whether the NIFTY50INDEX investors are eligible for bonus shares and dividends of the nifty50 companies or not, because I want to invest lumpsum amount in nifty50 index for long-term 40years to my retirement, sir please reply in detail.
Let us know if there are any queries after reading these blogs. We will be happy to help you in your investment journey. Thank you for the kind words, Tejaswini. We are glad that you liked our blog. Keep giving us your valuable feedback on our other blogs as well. Dear Rohit, thank you for the kind words. Go through them and let us know if you have any queries. Your simple language has made this jargan tooic butter smooth.
I was really confused as how we can invest in Nifty 50 or Nifty Bank but this post has cleared it all. Thank you for the kind words, Ali.
You made our day. We are glad that we could help you in your investment journey. Do share this with your friends who are looking to understand complex topics in simple words.
Thank you for the compliments, Ajay. It is an extremely satisfying feeling to know that we could clear all your doubts. Keep sharing your feedback on our blogs. Thank you for the praise. Keep reading our blogs, share them with your friends, and keep giving us your valuable feedback.
Dear Anupam, thank you for your kind words. We look forward to hearing your thoughts regarding our other blogs too. Dear Jai Shree, glad you liked our blog. Do let us know your thoughts regarding our other blogs too.
Thank you, Nelvin. This means a lot. Keep reading our blogs and keep encouraging us to write more. Thank you for the kind words, Pradeep. Thank you for the compliment, Deependra. We are glad you found our blog useful. Keep reading and keep commenting. Systematic investment via SIP in index funds with patience would certainly help in reeping the benefits of compounding. Thank you for commenting, Premchand. We are glad that we could explain the benefits of compounding and patience in simple words.
Do share with your friends as well and keep encouraging us to write more blogs. Thank you for the compliments, Ravi. It is extremely satisfying to know that you are sharing our blogs with your friends. Keep encouraging us. Keep it up and once again Thanks. Thank you so much for the encouraging words, Nikita.
It is an extremely satisfying feeling to know that you like the blog and find it useful. Do share this with your friends to help us reach more readers. Informative one.. I am a new investor,now I understood the concepts of Index funds advantages clearly..
Thank you ET.. Thank you so much, Suresh. November 12, Mutual Funds. While this phrase is commonly associated with power November 11, Mutual Funds. She was looking for something that could give her better returns and liquidity than FDs and bank deposits.
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