Investing in stock markets can seem to be a daunting task, especially if you are not sure which shares you should buy. Currently, the stock market is facing a crash like never before. However, for prospective investors, this is the best time to invest in the stock market.
We all know that when the stock market is down, that is the ideal time for someone to buy new stocks, but how can you know which stock you should buy? What if the stock that you are investing in today, falls further in the future?
Well, we’re here to talk about an instrument which, based on previous experience, has always provided great returns. If you are not sure which shares you should buy, then this instrument can be helpful and provide you with great returns when you invest for the long term. The instrument in question here is the Nifty 50. If you look at how the shares of the Nifty 50 have performed in the past few months, you may be apprehensive about the idea of investing in Nifty 50 stocks. However, when you look at the long-run graph of the Nifty 50 stocks, it is clear to see that the index has only increased in the long run. Thus, it is a good idea to invest in these shares. If you are someone who has always thought about investing in the stock market, but you do not have the time or inclination to do much research about it, investing in the Nifty 50 shares is a brilliant idea. Investing in these shares does not require much thought, and as you can see, the index only grows, in the long run, assuring you that you will gain interest in the long run.
Now, you may be thinking, if the index of Nifty 50 stocks is always increasing, then why are people only encouraged to buy when the market is down? Well, when the market is down, and you invest in the shares, it ensures that you get greater returns on your investments than if you were to buy at any other time.
Now that it is the ideal time to invest in getting assured returns on your investment, it is important to learn more about the Nifty 50 stocks.
What Is Nifty 50?
Nifty 50 comprises 50 companies, and it is considered to be a benchmark index. The top 50 best-performing companies in India are included in the Nifty 50 index. These companies are those who have the most market capitalization. Hence, when these companies are performing well, the index increases, and when they are not, the index goes down. When you invest in a company, the sticks may go up or down. However, the Nifty 50 graph shows that it is always increasing in the long run. So, is it always a good idea to invest in the Nifty 50 stocks?
Since we are talking about an index that tracks the economic activity of India, we must talk about Sensex. Similar to Nifty 50, Sensex is an index that is calculated by combining different companies. However, instead of 50, the Sensex comprises only 30 companies.
While it is always impossible to predict the future and learn whether or not investing in these stocks is a wise idea, past evidence can be helpful. As mentioned earlier, when you look at the long-run graph of the nifty 50 stocks, it is always increasing. When it comes to the Nifty 50 and Sensex stocks, its growth depends on the economic activity of India. When you believe that the economy in India will flourish in the future and that GDP will grow, you can be assured that when you invest in the Nifty 50 or Sensex stocks, you will get great returns on your investment.
How Can I Invest In Nifty 50 Or Sensex Stocks?
Now, it has been established that this is the right time to invest in the stock market and that investing in nifty 50 or Sensex is the best option for those who do not want to research too much before investing but still want to gain assured results. However, investing in these stocks is not easy. When you go to a broker’s website, you will not find an option to invest directly in these stocks. You need to find an alternate way to invest your money in the Nifty 50 or Sensex stocks.
When it comes to investing in these sticks, there are two principal ways to do it: either through Mutual Funds investments or through ETF.
How Can I Invest In Nifty 50 Or Sensex Through Mutual Funds?
We know that there are different types of Mutual funds, and one of them is the Index Mutual Fund. Investing in Index Mutual Fund is a good idea as they will give you the same returns as investing in Nifty 50 or Sensex stocks. The Index Mutual Fund invests in those instruments which are used to track the performance of Index like Nifty 50 and Sensex. Hence, if these stocks go up, you will get around the same interest from your Index Mutual Fund as you would get from investing in these sticks. The returns may be slightly lower in some cases as Index Mutual Funds are required to keep some of their investment in liquid form so that they can provide investors with quick withdrawal options.
How Can I Invest In Nifty 50 Or Sensex Through ETF?
ETF stands for Exchange Traded Funds. This is a stock, but it is comprised of different stocks. When you invest in this stock, it will provide you the same interest as you would receive when you invest in Nifty 50. This stock tracks the performance of the Nifty 50, and hence, when you invest in this stock and the Nifty 50 stock goes up, your returns will also increase.
What Is The Difference Between Index Mutual Fund And ETF?
Investing in Index Mutual Fund or the ETF will give you the same returns as you would get if you were to invest in the Nifty 50 or Sensex sticks, so how do these to investment methods differ from each other?
Investment in an Index Mutual Fund is made like any other mutual find. You will need to invest in this Mutual Fund via an AMC or an Asset Management Company. Hence, your investment in the Index Mutual Fund will be handled and controlled by the AMC.
ETF operates like any other share in the market. Hence to invest in an ETF, you will need to go to a broker and create a brokerage account and must have a Demat account. Once you have these two accounts, you can go to a broker and look up which ETF you want to invest in.
Hence, it is clear that Index Mutual Funds and ETF are great instruments for long term investments. When you want to invest in the stock market, you need to conduct a lot of research, you must learn about the company policies and operations of the company that you want to invest in. However, if you believe that India will get out of the economic slump that It seems to be in and that it will revive shortly, then investing in Nifty 50 or Sensex is a wise idea. In the long term, these stocks will give you good returns if the economic activity continues to grow in India because most of the companies that comprise these stocks will be performing well. Rather than investing in a company whose shares may go up or down at any moment, you can invest in Nifty 50 or Sensex stocks, which will perform well when economic activity increases and based on past evidence have shown to increase in the long run.