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4 Mins Read

Get Equity Exposure via NIFTY Next 50 and NIFTY 50 Investing

Nifty 50 and Nifty Next 50 | Equity Investments in India | Kristal.AI

The first eight months of FY20 saw investments worth ₹ 24,083 Crore in ETFs, thanks to investors in India increasingly veering towards this avenue to grow their wealth. ETFs offer a passive investment strategy, which means that investors stand to maximize their returns by following a buy-and-hold strategy. Index investing is one of the most popularly sought-after modes of passive investment as it allows investors to track a sector or an index with the help of one security. New investors who find the idea of actively managing their funds unappealing or too daunting can foray into the world of investments without feeling like they are out of their depth.

Of the many ETFs that investors can choose from, NIFTY 50 | NIFTYBEES and NIFTY NEXT 50 | JUNIORBEES are arguably some of the most coveted ETFs in the market. Historically, NIFTY has tracked companies that were believed to be quite stable, which is why these stocks were perceived as the ideal ones to buy and hold. They were even consequently marketed as “one-decision” stocks, implying that investors can literally buy them and keep them for large durations while their value grows. This perception also stems from the fact that such companies are known for showcasing not only a continual earnings growth but also high P/E ratios, attracting investors from both, the active and passive investment groups.

As a result, the term NIFTY 50 has become synonymous with great wealth creation, however, it pays to know that ETFs that track these companies do fall under moderate risk and high-risk categories, depending on the way the funds are structured. Within the Indian context, when you invest in NIFTY 50, your funds are spread across a range of sectors like information technology, energy, financial services, media, entertainment, pharmaceuticals, and more… Within this vein, the NIFTY NEXT 50 ETF has surged in popularity amongst investors as it invests in companies that are believed to be the next top 50 companies in India, following the ones already tracked by NIFTY 50.

Benefits of NIFTY Next 50 and NIFTY 50 Investing

  • Portfolio Diversification 

Both, NIFTY 50 and NIFTY NEXT 50 enable investors to achieve portfolio diversification via a single investment. With their funds spread across a range of sectors, investors can still rest, assured in the knowledge that their wealth will grow, even if a specific industry is not performing as expected.

As a diverse portfolio is one of the key requirements to enjoying a fruitful investment journey, investing in NIFTY 50 or NIFTY NEXT 50 certainly works in favor of the investor, irrespective of the size of the investment one pours in.

  • Low fees 

One of the biggest advantages of investing in NIFTY 50 and NIFTY NEXT 50 is that one does not have to worry about high fees and hidden costs that make the investment value skyrocket. Often, as novice investors have limited disposable income to put towards investments, even the slightest of difference in expense ratio or management fees can put certain funds out of the investor’s reach.

With these ETFs and passive investment strategies in general, the process of buying and selling stocks along with playing the market is entirely eliminated, dropping management fees and expense ratios significantly. As a result, one can expect lower fees and associated costs, making these investment avenues far more suitable for young investors who are just starting to take steps towards long term wealth creation.

  • Transparency 

The assets tracked in index funds are clearly spelled out for investors to evaluate and make informed decisions. As a result, one can expect not only a certain level of transparency that comes with these funds but also peace of mind from knowing that you’ve invested in companies that you believe in. This can be particularly important for investors with very low-risk appetite and a penchant for lying awake at night, consumed by anxiety over their investments.

  • Tax Benefits 

Investors in India are motivated by tax benefits while picking the right investment avenues for themselves, which is what makes NIFTY 50 and NIFTY NEXT 50 ideal for their needs. As these passive funds follow a buy-and-hold strategy, investors do not have to worry about huge capital gains taxes. This contributes to additional savings.

  • Simplicity

Investing in an index allows investors to enjoy diversification without having to create a complex strategy that requires market research and understanding. As a result, investors do not have to worry about making the wrong move while choosing investments – all it takes is the initial research regarding the right ETF for one’s needs. NIFTY 50 and NIFTY NEXT 50 offer a basket of stocks that have not only historically performed well but are also slated to continue performing well under the right market conditions, As a result, investors can eliminate the hassles of navigating their way through complex data and can enjoy a highly diverse portfolio.

How can you invest in NIFTY 50 and NIFTY NEXT 50?

Pinpointing the right stocks or ETFs for your needs can be quite challenging, no matter how experienced you may be with regards to making great investments. Our advisors at Kristal.AI are happy to help you find the perfect ETFs, based on your risk appetite, investment goals, and budget. In order to invest in NIFTY 50 and NIFTY NEXT 50, all you need to do is get in touch with our professional advisors and take the journey forward from there.

Disclaimer

This blog article has not been reviewed by the MAS. It is prepared solely for information purposes and does not constitute an offer or solicitation for the purchase or sale of units in the funds. This does not constitute any form of investment advice and Kristal Advisors (SG) Pte Ltd does not take into account your personal investment objectives, specific investment goals, specific needs, or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here. The information and publications are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Kristal Advisors (SG) Pte Ltd.

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