Regarding investments, each rupee saved is one earned rupee. As a result, low-cost mutual funds are increasingly popular among Indian investors. These funds have extremely low fees, which let more of your money remain invested and keep growing. Over time, returns can vary greatly depending on even a small charge difference.
Low Cost Mutual Funds: What Are They?
Low-cost mutual funds are those with extremely low expense ratios used for investment. The expense ratio is the charge fund houses charge to handle your money. Cut this charge; your real returns will rise.
Since they are passively managed, most low-cost funds are index funds or exchange-traded funds (ETFs). These funds merely follow a market index like Nifty 50 or Sensex, not trying to beat the market.
Why Would One Want Low Cost Mutual Funds?
- Reduced costs equate to greater over-time returns.
- Easy to grasp: They apply known indices.
- Perfect for long-term funds.
- Less dangerous than choosing particular stocks.
- Excellent choice for young investors and novices.
Low-cost funds are a great option if you wish for a hands-free, hassle-free approach to increasing wealth.
Low Cost Mutual Fund Types
The following are some typical forms of low-cost mutual funds that are offered in India:
- Index Funds: Track something like Nifty 50 or Sensex.
- Exchange Traded Funds (ETFs): Traded like stocks, ETFs track particular indices.
- Direct Plans of Mutual Funds: No distributor commission means a lower expense ratio than standard plans.
Best Low Cost Mutual Funds in India (Low Fees and Popularity-Based Approach)
- Nippon ETF based on Nifty 50 Bees
- Nifty Index Fund – Direct Plan UTI
- The ICICI Prudential Nifty Next 50 Index Fund
- HDFC Index Fund – Sensex Strategy
- Mirae Asset Nifty Fifty ETF
Generally speaking, these funds have an expense ratio ranging from 0.1% to 0.3%, while actively managed funds have 1.5% or more.
Starting an Investment
- Select a fund corresponding to your objective (Nifty, Sensex, sector-based).
- Choose a direct plan of growth for optimal compounding.
- Visit websites including Zerodha, Groww, Coin, or AMC.
- Invest lump sum or start SIP, the systematic investment plan.
- Remain committed over the long run; avoid reacting negatively over transient fluctuations.
Advice for Maximising Low Cost Mutual Fund Performance
- For balance, mix cheap money with other asset classes (such as PPF or FD).
- Don’t try timing the market; keep consistent with SIPs.
- Once a year, not daily, review your portfolio.
- Steer clear of too many similar funds; one or two will be plenty to start.
Last Words
The ideal mix of simplicity, affordability, and long-term growth is what low-cost mutual funds provide. This is the approach to make wise investments free from significant fees. The savings you make over years could be thousands or even lakhs in extra returns. Get going early, keep involved, and let compounding work its wonders.
