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To buy index

Discussion in 'Investment Analysis' started by manickarajan, Oct 18, 2021.

  1. manickarajan

    manickarajan Responder

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    Hi Shabbir,

    Do we have any other option to buy index like Nifty50 other than index fund for long term
     
    manickarajan, Oct 18, 2021
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  2. shabbir

    shabbir Administrator Staff Member

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    Why do we need other option and how it may be different?
     
    shabbir, Oct 18, 2021
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  3. manickarajan

    manickarajan Responder

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    Mutual fund means there will be expense ratio..instead of it we buy directly like stocks it can be avoided..correct me if I am wrong
     
    manickarajan, Oct 18, 2021
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  4. shabbir

    shabbir Administrator Staff Member

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    No. You are comparing apples with oranges. Even if you need to buy each stock in the ratio of being part of the index, you will need a lot more money. Like for example the average weight of Reliance Industries is 10% in the index, your portfolio should match the same and that may mean you may have to buy a lot more units of Reliance so you can get one unit of some other company to match the weight in the index.

    Ideally, ETF is great and then may be mutual fund. Direct stocks just to replicate the index is a bad idea. One can invest directly in great companies and avoid not so great companies from the index.
     
    shabbir, Oct 18, 2021
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  5. manickarajan

    manickarajan Responder

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    Thank you Shabbir
     
    manickarajan, Oct 19, 2021
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  6. shabbir

    shabbir Administrator Staff Member

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    The pleasure is all mine.
     
    shabbir, Oct 19, 2021
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