Warren Buffett says most investors — including professionals — cannot beat a simple index fund over the long run. In India, that means a Nifty 50 index fund.
What is an index fund?
An index fund buys all the stocks in an index — in the same proportion. A Nifty 50 index fund holds all 50 of India’s largest listed companies. No fund manager decides what to buy. The fund simply mirrors the index. Lower cost, less human error.
Why index funds beat most active funds
Active funds charge 1.5–2.0% expense ratio annually. Index funds charge just 0.10–0.20%. Over 20 years, that 1.5% fee difference on a growing corpus costs you lakhs.
| Period | Nifty 50 CAGR |
|---|---|
| Last 5 years | ~14% |
| Last 10 years | ~13% |
| Last 20 years | ~14% |
Best picks: UTI Nifty 50 Index Fund (0.20%), HDFC Index Fund (0.20%). For full fund selection advice: mutual funds for beginners. Compare with FDs: SIP vs FD.