A Passive Investment Strategy in Nifty Can Provide Consistent Returns Over Time

Why do so many retail investors in India panic when the market dips? The answer is simple: they think short-term. 

Most investors are either overwhelmed with choices or chasing hot tips. But passive investing in the Nifty 50 doesn’t demand either. It needs patience. That’s all.

We’ll break down why Nifty 50-based passive investing works. 

Why is the Nifty 50 India's Favourite Index for Long-Term Wealth?

The Nifty 50 isn’t any random index. It’s 50 of the top-listed companies in India. These companies represent banking, technology, pharma, oil, and more. That means automatic diversification.

Most people miss the fact that active fund managers try to beat this index. But in real terms, they rarely do. And even when they do, the fund fees often consume the extra gains.

In 2024, the Nifty 50 ended at 23,644.80, yielding 8.8% for the year. Over the last decade, Nifty has consistently delivered double-digit returns, even after ups and downs.

Nifty 50 Past Yearly Performance

Still think index funds are boring? Boring is what you need.

Lower Costs and Less Stress — That’s Why It Works

When you invest in an active fund, you pay for fund management. And these charges hurt long-term returns. Passive funds track the index. No fancy strategies. No guesswork. That’s why costs are low.

An active mutual fund may charge around 1.5%. A passive index fund? Just 0.2% or even less. This difference looks small but compounds heavily.

Let’s assume you invest ₹5,00,000 for 10 years.

Impact of Costs – Active vs Passive Fund

You earned ₹1,15,000 extra by doing nothing fancy. Just by avoiding high-cost funds.

Also, passive investing removes emotions. No fear buying. No panic selling. You don’t react to news. You just invest and stay.

SIP in Nifty: Straightforward and Strong

A monthly SIP in a Nifty 50 index fund is the most underrated wealth tool. You don’t need to know market cycles. 

You just keep investing every month.

If you start early and stay consistent, the results are surprising.

Let’s say you invest ₹10,000 every month for 10 years. Assuming 12% CAGR, here’s what happens:

SIP in Nifty Index Fund

It’s not a trick. It’s math. The earlier you start, the better it works.

Start with ₹5,000. Step up by 10% every year. Stay for 20+ years. That’s how wealth is built.

Active Funds vs Passive Funds — The Real Picture

Fund managers change. Strategies change. But the Nifty index stays consistent. It follows clear rules. No bias. No 

emotions.

Here’s the real problem with active investing: inconsistency. Only a handful of managers outperform the index. 

And they don’t stay on top forever.

Let’s look at the numbers.

Active vs Passive (5-Year CAGR Comparison)

The returns are close. But passive takes the lead when you include lower costs and peace of mind.

And you don’t have to track performance every quarter. No chasing fund ratings. No manager interviews. Just automatic growth.

How to Start Passive Investing — The Simple Way?

There’s no perfect time to start. There’s only now. If you're unsure how to begin, start small and build up.

Buy Nifty ETFs

Need demat. You buy like a stock. Very low fees. Suits investors who track market prices.

Nifty Index Mutual Funds

No demat needed. Just open with any AMC or app. Choose direct plans to cut cost.

SIP Every Month

Don’t stop SIPs during crashes. That’s when you accumulate the most units. Stay consistent.

Use Step-Up SIP

Increase SIP by 10-15% each year. Helps you beat inflation and boost corpus without effort.

Keep Switching Low

Stick to one fund. Too much switching kills compounding. Avoid noise. Let time do its work.

Conclusion

Active investing gives excitement. Passive investing gives money. Big difference.

You won’t find news channels discussing index funds. They’re boring. But boring builds ₹1,00,00,000 portfolios.

Nifty 50 is not perfect. It can fall. But it recovers. Always has. If you can stay invested through the bad years, the good ones do the work.

Start with ₹500 monthly. Or ₹5,000. Doesn’t matter. What matters is not stopping.

Markets reward discipline. Not drama. You don’t need to beat the market. You need to match it. That alone can grow wealth bigger than trying and failing to beat it.

So if you’re tired of researching stocks, chasing tips, switching funds — stop. Go passive.

FAQs 

1. Is passive investing better for beginners in India?
Yes. You don’t need stock market skills. Just pick a Nifty 50 index fund, set SIP, and forget it.

2. How long should I invest in Nifty 50 index fund?
Ideally, 10 years or more. Index funds grow well over long term. Ignore short dips.

3. Which Nifty 50 index fund is best?
Pick a direct plan with low tracking error. Don’t chase returns. Pick consistency.

4. Can I do passive investing for retirement?
Combine Nifty index fund with PPF, EPF or NPS. Stay invested 20+ years.

5. What if Nifty 50 doesn’t perform?
No guarantee in market. But Nifty has recovered from every crash. Keep investing. Don’t stop SIPs.

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LoansJagat Team

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