How Teachers and Professors become rich? Simple 4 terms helps them

Why Teachers and Professors become rich ? Teaching professionals allows them to understand power of compounding, dividing logic in the investment, top stocks in the market and impact of expense ratio in long term. This the reason most of teaching professionals invest in index mutual funds for long term wealth creation.

• Power of Compounding
• Index funds
• Long term
• Low Expense ratio

Index funds are best choice for long term return. An index fund is always be low-cost as it is not actively managed by fund manager. The expense ratio of index funds would be range from 0.1% to 0.3%. Active mutual funds expense ratio would be 0.6% to 2% based on mutual fund managers and fund house.

An index fund should be low-cost and Simple to select

Expense ratio is crucial factors in mutual funds. 1% would impact drastically in long term. Let us take example of 10000 SIP investment in mutual funds for 20 years. Let us take 2 funds. One is active fund and its expense ratio is 1.5%. Another one is passive index funds and expense ratio is 0.2%.

10000 Monthly SIP * 20 Years * 14% = 1.3 crores (expense ratio of the active fund 1.5%)
10000 Monthly SIP * 20 Years * 15% = 1.5 crores (expense ratio of the index fund 0.2%)

In case both funds invests in same funds and it expense ratio differs by 1%, it would increase 20 lakhs in 20 years. For a long term it always good to invest but the only question for retail investor is where to invest or in which company,  sector to invest and allocation towards particular sector in respect of total fund.  Investing in index fund gives you better returns if you stayed invested in them for a long term duration.

Buffett says index funds are ‘the most sensible equity investment’ for most people

Nifty 50 index stocks are,

1. HDFC Bank Ltd. Banks
2. Reliance Industries Ltd. Petroleum Products
3. Housing Development Fin. Corp. Ltd.£ Finance
4. Infosys Limited Software
5. ICICI Bank Ltd. Banks
6. Tata Consultancy Services Ltd. Software
7. Kotak Mahindra Bank Limited Banks
8. Hindustan Unilever Ltd. Consumer Non Durables
9. ITC Ltd. Consumer Non Durables
10. Larsen and Toubro Ltd. Construction Project
11. Bharti Airtel Ltd. Telecom – Services
12. Axis Bank Ltd. Banks
13. State Bank of India Banks
14. Asian Paints Limited Consumer Non Durables
15. Bajaj Finance Ltd. Finance
16. Nestle India Ltd. Consumer Non Durables
17. Maruti Suzuki India Limited Auto
18. HCL Technologies Ltd. Software
19. NTPC Limited Power
20. Power Grid Corporation of India Ltd. Power
21. Titan Company Ltd. Consumer Durables
22. Sun Pharmaceutical Industries Ltd. Pharmaceuticals
23. Dr Reddys Laboratories Ltd. Pharmaceuticals
24. UltraTech Cement Limited Cement
25. Tech Mahindra Ltd. Software
26. Britannia Industries Ltd. Consumer Non Durables
27. Coal India Ltd. Minerals/Mining
28. Wipro Ltd. Software
29. Bajaj Finserv Ltd. Finance
30. Mahindra & Mahindra Ltd. Auto
31. Bajaj Auto Limited Auto
32. Bharat Petroleum Corporation Ltd. Petroleum Products
33. Oil & Natural Gas Corporation Ltd. Oil
34. Shree Cement Ltd. Cement
35. Cipla Ltd. Pharmaceuticals
36. Indusind Bank Ltd. Banks
37. Hero MotoCorp Ltd. Auto
38. Indian Oil Corporation Ltd. Petroleum Products
39. Tata Steel Ltd. Ferrous Metals
40. Adani Ports & Special Economic Zone Transportation
41. Grasim Industries Ltd. Cement
42. Eicher Motors Ltd. Auto
43. UPL Ltd. Pesticides
44. JSW Steel Ltd. Ferrous Metals
45. GAIL (India) Ltd. Gas
46. Hindalco Industries Ltd. Non – Ferrous Metals
47. Bharti Infratel Ltd. Telecom – Equipment & Accessories
48. Tata Motors Ltd. Auto
49. Vedanta Ltd. Non – Ferrous Metals
50. Zee Entertainment Enterprises Ltd. Media & Entertainment

Warren Buffett is one of the most iconic and successful investors of our time.  Buffett is a master of value investing wherein patience, discipline, and risk aversion are the essential ingredients for success. But he acknowledges that individual stock picking is not for everybody. In fact, most average, long-term investors would benefit from a much simpler strategy, he says: investing in low-cost index funds.

“My regular recommendation has been a low-cost index fund,” Buffett wrote in his 2016 Berkshire Hathaway annual shareholder letter.

Buffett advice to average investors that,

• Buy a low-cost index fund
• Buy in SIP mode over a period of time
• Hold it for longer term

How can I invest in Nifty Index Fund?

There are many index funds available in the market. Here the top 6 nifty index funds to start your long term investment. All the funds would be investing to same stocks. There would be no major difference in investment pattern of this funds. You can start any one of fund.

• HDFC Index Nifty 50 Growth Direct Fund (Expense ratio : 0.1%)
• IDFC Nifty Growth Direct fund(Expense ratio : 0.24%)
• UTI Nifty Index Growth Direct fund (Expense ratio : 0.1%)
• Nippon India Index Nifty Growth Direct fund(Expense ratio : 0.1%)
• ICICI Prudential Nifty Index Growth Direct fund(Expense ratio : 0.1%)
• SBI Nifty Index Growth Direct Fund(Expense ratio : 0.29%)

Nifty Junior Index funds :

You have option to invest in Nifty Junior Index to invest in top 50 – 100 nifty index stock. Nifty Next 50 companies as on May-2021.

1. Abbott India Ltd
2. ACC Ltd
3. Adani Green Energy Ltd
4. Adani Transmission Ltd
5. Alkem Laboratories Ltd
6. Ambuja Cements Ltd
7. Aurobindo Pharma Ltd
8. Avenue Supermarts Ltd
9. Bajaj Holdings & Investment Ltd
10. Bandhan Bank Ltd
11. Bank Of Baroda
12. Berger Paints India Ltd
13. Biocon Ltd
14. Bosch Ltd
15. Cadila Healthcare Ltd
16. Colgate-Palmolive (India) Ltd
17. Container Corporation Of India Ltd
18. Dabur India Ltd
19. DLF Ltd
20. General Insurance Corporation of India Ltd
21. Godrej Consumer Products Ltd
22. Havells India Ltd
23. HDFC Asset Management Company Ltd
24. Hindustan Petroleum Corporation Ltd
25. Hindustan Zinc Ltd
26. ICICI Lombard General Insurance Co Ltd
27. ICICI Prudential Life Insurance Company Ltd
28. Indraprastha Gas Ltd
29. Indus Towers Ltd
30. Info Edge (India) Ltd
31. Interglobe Aviation Ltd
32. Larsen & Toubro Infotech Ltd
33. Lupin Ltd
34. Marico Ltd
35. Motherson Sumi Systems Ltd
36. Muthoot Finance Ltd
37. NMDC Ltd
38. Oracle Financial Services Software Ltd
39. Petronet LNG Ltd
40. Pidilite Industries Ltd
41. Piramal Enterprises Ltd
42. Power Finance Corporation Ltd
43. Procter & Gamble Hygiene & Health Care Ltd
44. Punjab National Bank
45. SBI Cards And Payment Services Ltd
46. Siemens Ltd
47. Tata Consumer Products Ltd
48. Torrent Pharmaceuticals Ltd
49. United Breweries Ltd
50. United Spirits Ltd

List of Nifty Junior Index Funds,

• DSP Nifty Next 50 Index Growth Direct Plan(0.81)
• IDBI Nifty Junior Index Growth Direct Plan(0.52)
• Motilal Oswal Nifty Next 50 Index Growth Direct Plan(0.8)
• SBI Nifty Next 50 Index Growth Direct Plan(0.2)

You have option to invest in Nifty Junior Index to invest in top 50 – 100 nifty index stock.

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