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All about Index Funds

All posts about Equity

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  • ·         Buy direct plan Growth option . This will have less expense ratio because there is no broker involved here and no commission .

            For example ICICI Prudential Nifty Next50 Direct Growth Plan has expense ratio of 0.6%
                       Where as UTI Nifty next50 Regular plan has expense ratio XXX
  • ·         Invest only 1/3 of your total investable amount. E.g If you have one lakh invest only 30,000 in Index funds .

          Why 30% ? In case if there is any deep correction and panic selling just like we had Global                 recession in 2008 then all the amount that we invested already will come down .
            So in this point of time we need add 30% of the amount as possible which will make the overall portfolio value to average point. It is advisable to invest in monthly SIP or Quarterly Sip which will make you invest in all points of time in an year. 

  • ·         Do not select ETF’s

E.g UTI Nifty Exchange Traded Fund(ETF) .  ETF means it is a just like a stock /share traded in NSE/BSE which gives quotation as per today’s value just like 10,700 points.  In long term when you want to redeem your amount which is a huge amount like 1 crore or so no body will be ready to buy in a single day or week such huge amounts . This is called liquidity issue. So you need to sell in less price and sell in small instalments which will not be useful for your in need. If it is a mutual fund then no worries you can sell redeem in bulk amount because all mutual funds are not like stock quote they have nav value and have freedom to redeem amounts in bulk without any liquidity issue.
  • ·         Don’t buy Regular plan. Your broker will take commission life time for the fund you hold. In long run for Nifty next 50 Index plan regular plan you may loose upto 30 Lakhs rupee for 1 Lakh investment just for wrong decision.
  • ·         Don’t buy Dividend plan. If you do this you are eating the growth in mid and miss power of compounding opportunity in long term.
  • ·         Don’t not go to ICCI direct office or ICICI Bank . Go to ICICI Prudential AMC office . If you want to find ICICI Prudential office near to your home call the customer care number that i have given to you.
  • ·         Don’t not invest all your amount in index funds. As warren Buffet says “Don’t put all eggs in one basket” which is applicable to equity.

·         Many people doesn't know about this type of mutual funds especially index funds it's better not to take as many suggestions from different people as it is a relatively new instrument very less people know about that. There is a high chance of misguiding or confusing you with their products. If you do a proper research on this you can be stubborn to them.

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