What Is Index Funds | How to Invest in Index Fund | Types of Index Funds

If You Had Invested ₹10,000 in Nifty Index Funds in 1995 Your Investment Would Have Been Grown 10x to ₹ 1,00,000.

Yes, That’s Right, You Could Have Made 10x Your Investment Just Buy Doing Nothing, No Stock Research, No Balance Sheet Checking Nothing.

So Now You Must Be Wondering that What Is an Index Fund and How Can You Invest in It Right?

That’s What We Are Going to Learn.

“By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals,”

Warren Buffett

So Buckle up and Let’s Get into It.

What Is Index Funds?

What is Index Funds?
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As the Name Suggests Index Funds Are the Mutual Funds That Invest in an Index.Whatever You Invest in Index Funds Is Directly Invested in Companies that Are Selected on that Particular Index.

If You Invest in Nifty Index Fund Then You Will Get Almost Same Return as Nifty.

Index Funds Are Passive Funds So Expense Ratio Will Be Low.

To Learn More about What Is Is Index Fund We Need to Know about What Is Index.

What Is Index?

An Index Is Something That Derives Their Value from Selected Companies.

For Example, Nifty50(Commonly Known as Nifty) Gets Its Value from India’s Top 50 Companies.

It Helps Us to Easily Track the Movement of the Stock Market.

Types of Indexes

  • Nifty50
  • Nifty100
  • Nifty Next50
  • Sensex
  • Bank Nifty
  • Nifty Alpha 50 And Many More.

Why Should We Invest in Index Funds?

  • Investing in Index Funds Helps Us to Get Exposer in Top Companies.
  • It Also Helps in the Diversification of Our Portfolio.
  • Liquidity Is Also High in These Funds. You Can Withdraw Your Investment Anytime from Index Funds.
  • Fees Are Also Low Compared to Other Mutual Funds.
  • If You Are a Beginner in Stock Market and Don’t Know Much About It Then You Should Start by Investing in Index Funds. It Will Lowers Your Risk and Gets a Steady Return.
  • No Need to Worry about Stock Research and Company Financials. Just Invest and Forget about It.

If You Invest ₹10,000 Every Month for the Next 30 Years, You Can Get a Return of More than Rs 2 Crore!*

Difference between Index Funds and Index ETFs

There Are Two Main Differences between Index Funds and Index ETFs.

  • Expense Ratio (Read as Charges) on Index ETFs Are Lower than Index Mutual Funds.
  • You Need a Demat Account to Invest in Index ETFs Whereas You Do Not Need Any Demat Account to Invest in Index Mutual Funds.

There Are So Many Index Funds Available in the Market.

Here Are Some Mutual Funds You Can Checkout.

Index Fund NameExpense RatioSIP (Minimum)Lumpsum
One Time Investment (Minimum)
UTI Nifty Index Fund – Direct Plan0.10%₹ 500₹ 5000
ICICI Prudential Sensex Index Fund – Direct Plan0.10%₹ 100₹ 5000
HDFC Index Sensex Direct Plan0.10%₹ 500₹ 5000
HDFC Index Fund Nifty 50 Plan Direct0.10%₹ 500₹ 5000

How to Invest in Index Funds

Investing in an Index Fund Is the Same as Investing in Mutual Fund. You Can Use Any Platform That Allows You to Invest in Mutual Funds.

You Just Need PAN Card to Start Investing in Index Fund.

I’m Going to Show You How to Invest in Index Funds via 3 Platforms.

How to Invest in Index Fund via Zerodha Coin App

  1. Open Zerodha Coin App.
    • Zerodha Coin main Home screen
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  2. If You Don’t Have Funds to Your Zerodha Account Then Go to Profile Tab and Add Funds by Taping on the Manage Button. Complete Payment via UPI/IMPS/Netbanking.
    • Zerodha Coin Profile:Add fund Tab
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  3. Go to Discover Tab.
    • Zerodha Coin Search: discover Screen
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  4. Write Index Fund in Search Field or Select Index Funds from the List of Suggestions.
    • Zerodha Coin index fund Search Result
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  5. Select the Fund You Want to Invest In. In My Case, I’m Going to Invest in ICICI Prudential Sensex Index Fund.
  6. If You Want to Invest Only One Time Then Tap on Buy Button. If You Want to Start SIP(Systematic Investment Plan) Then Go to Step 11 Below.
    • Zerodha Coin Index fund Detail Screen
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  7. You Will Get a Screen like This to Choose the Amount You Want to Invest. Enter the Amount and Then Tap on Buy.
    • Zerodha Coin index fund Lumpsum Investment screen
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  8. On the Next Screen, It Will Ask You to Confirm Your Investment Order. Tap on Invest.
    • Zerodha Coin index fund Investment Confirm Screen
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  9. Voila. You Will Get a Message Indicating that Your Order Is Placed.
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  10. You Can Check Your Order Status on the Investment Tab.
    • Zerodha Coin index fund Lumpsum Order Screen
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  11. If You Want to Start SIP(Invest Every Month Automatically) Then Tap on SIP Button.
    • Zerodha Coin Index fund Detail Screen
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  12. On Next Screen Enter the Amount You Want to Invest per Month. Also, Choose the Date and Frequency(Weekly, Monthly, Quarterly). Then Tap on Create SIP Button.
    • Zerodha Coin index fund SIP Investment Confirm Screen
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  13. Then Will Get a Confirmation Popup. Tap on Create.
    • Zerodha Coin index fund SIP Investment Confirm Screen
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  14. And Done… Your SIP is Created.
    • Zerodha Coin index fund SIP Created Screen
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  15. To Check Your SIP Status Got to Investment Tab And Tap on SIPs.
    • Zerodha Coin index fund SIP List Screen
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How to Invest in Index Fund via Groww App

  1. Open Groww App.
    • Groww app Home Screen
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  2. If You Don’t Have Funds in Groww Then Do It by Going to You Tab and Taping the Add Money Button.
    • Groww app Add Money Screen
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  3. Then Tap on Explore Tab. Tap on Searchbox at the Top and Search for Index Fund.
    • Groww app index fund Search Screen
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  4. Choose One You Want to Invest In. I’m Going to Invest In ICICI Prudential Sensex Index Fund. Tap on One Time Button.
    • Groww app index fund details screen
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  5. Enter the Amount You Want to Invest in This Fund. Then Tap on Invest Now.
    • Groww app Investment amount Screen
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  6. And That’s It. Your Investment Is Completed.
    • Groww app Investment Success Screen
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How to Invest in Index Fund via Paytm Money App

  1. Open Paytm Money App. Tap on Search Icon on Top Right Corner.
    • Paytm Money app Home Screen
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  2. Search for Index Fund.
    • Paytm Money app Search Screen
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  3. Tap on the Fund You Would Like to Invest In.
    • Paytm Money app Search Result Screen
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  4. You Will Get a Screen with Details Regarding Your Fund. Tap on Invest Now.
    • Paytm Money app Fund Details Screen
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  5. Choose One Option from SIP or Lumpsum. Enter the Amount You Want to Invest. Tap on Proceed.
    • Paytm Money app Investment Amount Screen
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  6. Choose Your Payment Method. Tap on Proceed to Payment.
    • Paytm Money app Payment Screen
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  7. That’s It. Your Investment Is Completed.

Conclusion

If You a Working Professional and Want to Invest in the Stock Market to Grow Your Wealth and Be Part of the Country’s Development Then Index Fund Is the Best Options for You.

Index Fund Is One of the Safest Options in the Stock Market. It Is Made up from Top Companies So Risk Is Very Low.

Let Me Know in the Comment Section below If You Need Any Help or Have Any Questions. I Am Happy to Help.

Om Patel
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