Systematic investing isn’t confined to mutual funds—you can also invest directly in the market through your Demat account with ease. This article highlights how a disciplined approach to investing in NIFTY 50 ETF can simplify your journey toward building a robust retirement corpus.
ETFs and Their Growing Relevance
Exchange-traded funds (ETFs) are investment funds that trade on stock exchanges like individual stocks. They typically track an index, sector, commodity, or asset class, offering diversification within a single investment. For those who are still unclear about the difference between Index ETFs and Index Mutual Funds, we’ve provided a detailed article to help you navigate the distinctions.
ETFs have become increasingly popular among investors in recent years due to their diversification, cost efficiency, and market-linked returns. You can buy ETFs directly through your Demat account, just like individual stocks. However, by investing regularly, similar to a SIP, you add the benefits of discipline and rupee-cost averaging. This strategy combines the consistency of systematic investing with the flexibility and transparency that ETFs offer.
If you can’t outsmart the market, why not just own the whole darn thing? – PlanB Financials
In this article, we focus on the Nifty 50 ETF. It is a stock market index representing the 50 largest and most liquid companies listed on the National Stock Exchange (NSE) of India. Covering various sectors, it serves as a benchmark for the Indian equity market’s overall performance.
Nifty 50 ETF is offered as a product by several financial institutions and asset management companies in India. Some popular choices are Nippon India ETF Nifty 50, SBI ETF Nifty 50, HDFC Nifty 50 ETF, ICICI Prudential Nifty 50 ETF, and many more. Discover the complete list of NIFTY 50 ETFs listed on the Indian Stock Exchange by clicking here.
Since its inception on June 30, 1999, the Nifty 50 index has delivered an impressive annualized return of 14.2% CAGR, making ETFs that track this index an effective tool for long-term wealth creation.
Let’s examine how a ₹10,000 monthly investment in ETFs at different starting ages can build a substantial retirement corpus by 60.
Investing in NIFTY50 ETF at 25: Reaching ₹6.68 Crores by 60
The productive lifecycle for most young professionals in India typically begins around this age. At 25, life feels endless, and retirement seems distant. But a ₹10,000 monthly SIP at this age could transform into a jaw-dropping ₹6.68 crores by 60! With just ₹42 lakhs invested over 33 years, the power of compounding does all the heavy lifting.
It is to be noted that delaying your investment by just one year reduces your final corpus to ₹6.16 crores from ₹6.68 crores, highlighting the importance of starting as early as possible.
Investing in NIFTY50 ETF at 30: Reaching ₹3.85 Crores in 30 Years
If you begin at 30, you still have plenty of time to build a strong corpus. Starting at 30 allows for a 30-year investment period. Your ₹36 lakhs total investment could grow into ₹3.85 crores. While you miss out on the extra five years, this is still a strong corpus for a secure retirement.
The thing to note here is that postponing a decision for just 5 years instead of starting at 25, might temporarily free up ₹6 lakhs. However, the long-term opportunity cost is significant, as you’d miss out on accumulating a corpus of approximately ₹2.8 crores.
Investing in NIFTY50 ETF at 35: Reaching ₹2.17 Crores in 25 Years
At 35, the clock ticks faster, but it’s not too late. With 25 years to invest, a ₹10,000 monthly ETF investment grows your ₹30 lakhs into ₹2.17 crores. This shows how ETFs still offer significant returns even with a shorter time horizon.
This is the point where every year counts—your returns are working harder but for a shorter time.
Investing in ETFs at 40: Reaching ₹1.19 Crores in 20 Years
By 40, responsibilities peak, and retirement feels closer than ever. Yet, investing ₹24 lakhs over 20 years could still give you ₹1.19 crores. While it won’t reach the ₹2 crore club, it’s a meaningful step towards a comfortable future.
Investing in ETFs at 45: Achieving ₹64 Lakhs in 15 Years
A 45-year-old starting a SIP might feel like it’s too late, but ₹18 lakhs invested over 15 years from 45 to 60 could still yield ₹64 lakhs. It’s proof that even late starters can create substantial wealth by staying committed. Late but better than never and with substantial growth compared to traditional savings options.
Investing in ETFs at 50: Achieving ₹33 Lakhs in 10 Years
Referred to as a last-minute push, starting at 50 leaves only 10 years of investment. While ₹12 lakhs may seem small, compounding can still take it to ₹33 lakhs. It’s far from ideal, but every rupee invested now lightens the load on future savings.
Investing in ETFs at 55: Achieving ₹14.7 Lakhs in 5 Years
With only 5 years left, it’s more of a sprint to the finish. At this stage, SIPs function more as a disciplined savings approach rather than a significant wealth-creation tool. A ₹6 lakh investment can grow to ₹14.7 lakhs by 60—while the growth is modest, consistent saving helps meet short-term financial goals. Additionally, stable market conditions during this period become crucial for maximizing returns.
Conclusion
The calculations demonstrate that beginning your monthly NIFTY 50 ETF investments early through your Demat account can significantly boost your retirement corpus. The longer your money stays invested, the more compounding works in your favor, leading to efficient wealth creation.
Even if you start later, maintaining a disciplined approach with regular ETF investments can still help you build a solid retirement fund by the age of 60.
Frequently Asked Questions (FAQs)
1. Why is NIFTY 50 ETF a good choice for long-term retirement planning?
Choosing individual stocks often demands a combination of skills and guidance, but investing in a NIFTY 50 ETF is like owning the best of the entire market. It offers low costs, built-in diversification, and market-linked returns, making it an excellent ‘No Brainer” for long-term wealth creation through consistent investments.
2. Can I invest in NIFTY 50 ETF even if I start late?
Yes, NIFTY 50 ETF is suitable for investors of all ages. While starting early maximizes returns, late starters can still benefit from disciplined investing.
3. Are NIFTY 50 ETF returns guaranteed?
No, NIFTY 50 ETF returns are market-dependent. However, over the long term, equity-based ETFs have historically delivered strong returns.
4. How do I start a monthly NIFTY 50 ETF investment from my Demat account?
You can manually buy this ETF or set up automated monthly investments, similar to a SIP, through your broker’s platform.
5. What are the risks involved in ETF investing?
ETFs carry market risks, such as volatility and price fluctuations, but these risks are mitigated over time through long-term investing and diversification.
