How to Invest in Nifty Index Fund Directly Online | My Espresso

How to Invest in Nifty Index Fund?

Recently, there has been a huge interest in investing in index funds in India. In 2021, the country has already seen the launch of more than 15 index funds and several ETFs (exchange-traded funds), while in 2020, the figure was just 17.

So, if you are considering investing in a Nifty Index fund, there are a few things that you should have clear knowledge about.

Published on 13 January 2022

What Is Nifty 50?

One of India’s broad-market benchmark indices, the Nifty 50 tracks the price activities of the 50 largest businesses listed in the NSE (National Stock Exchange). A trader widely uses the Nifty index fund to gauge the performances of the share market as a whole.
Also Read: What are Stock Market Indices?

What Exactly is a Nifty Index Fund?

A Nifty Index Fund is a mutual fund where the investors' money is invested in the stocks of the businesses featured in the Nifty index. So, when you invest in such a fund, you will essentially invest in a mutual fund and not in a specific stock. These funds are designed to match the composition of the companies listed in the Nifty 50 index.

One of the major reasons behind considering Nifty to be a good indicator of the share market's performance is that it covers businesses across 14 varied sectors. As a result, whenever an investor invests in a Nifty index fund, he exposes himself to a huge range of businesses in one go and can thereby reduce the risks related to the investment considerably.

How To Invest in the Best Nifty Index Fund?

If you wish to invest in an index fund through Nifty, follow the below-mentioned processes to make your investment easier and seamless:

  1. Demat and Trading Account: Open a Trading and Demat Account in case you do not already have one. You can get help from a stockbroker to open these accounts.
  2. Proper procedure: Follow every single procedure mentioned by your stockbroker while opening your trading and Demat account. You will generally have to fill an online form and upload the scanned copies of your KYC (Know Your Customer) documents like proof of residence, identity, and income.Once your KYC verification is over, the stockbroker will process your application for opening your trading account and Demat account.
  3. User ID and password: After account opening, you will receive a unique user ID and password. You will have to use this information to then log in to the trading platform of your stockbroker.
  4. Fund selection: On the trading platform, you can navigate through the mutual fund section and choose a Nifty index fund to invest in. Before doing that, it is also vital for you to do a comprehensive analysis of their past performances and track records. Also, do not forget to read all the scheme related documents carefully before investing.
  5. SIP or lump sum units: Finally, once you’ve chosen the best Nifty index fund for direct growth, you can choose to start a SIP (Systematic Investment Plan) or buy units of the fund with a lump-sum amount at one go.

Bottom Line

If investing in a Nifty index fund could be the best thing for you if you are looking for a long-term trading strategy with lower risks. And with the help of the steps mentioned above, you can easily invest in an index fund without any hiccups.
Also Read: What are Index Options?

Chandresh Khona
Team Espresso

We care that you succeed

Bringing readers the latest happenings from the world of Trading and Investments specifically and Finance in general.