Building wealth does not always need daily effort, complex charts, or sleepless nights. Many people just want their money to grow slowly, safely, and steadily over time. If you are one of them, index funds may be the right choice for you.
Whether you are a student, a working professional, a retired person, or someone planning for the future, this guide will help you understand how index funds work and how they can help you build wealth without stress.
What Is an Index Fund?
An index fund is a type of mutual fund that follows a market index. An index is just a list of companies. For example, the Nifty 50 index has the top 50 companies in India like Reliance, TCS, Infosys, HDFC Bank, and others.
An index fund simply buys shares of these companies in the same proportion as the index. There is no guessing. There is no trying to beat the market. The fund only follows the market. That is why index funds are called passive funds.
What Does Passive Investing Mean?
Passive investing means investing your money and letting it grow with time.
You do not try to pick the best stock.
You do not worry about daily ups and downs.
You do not change funds again and again.
You invest once or invest regularly and stay invested for years. Index funds are perfect for passive investing because they move with the market.
Why Index Funds Are Popular in India in 2026
Index funds are becoming popular in India for many simple reasons.
First, they are easy to understand.
Second, they have low costs.
Third, they give steady returns over the long term.
Fourth, they reduce stress.
Many people have realized that most active funds fail to beat the market over long periods. So instead of trying to be smart, people prefer to be steady.
That is why searches like best index funds India 2025 and low cost index funds India are growing fast.
Who Should Invest in Index Funds?
Index funds are suitable for almost everyone. Students who start early, Working professionals with busy lives, Business owners who do not track markets daily, Parents saving for children
Senior citizens who want peace of mind.
If you want long term growth without headache, index funds are for you.
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How Much Can ₹10 Lakh Grow in Index Funds?
Let us understand this with a simple example.
If you invest ₹10 lakh in index funds and get an average return of 11 percent per year, here is what happens. After 5 years, ₹10 lakh becomes around ₹17 lakh.
After 10 years, ₹10 lakh becomes around ₹28 lakh.
After 15 years, ₹10 lakh becomes around ₹48 lakh.
This is the power of time and compounding. You do not need luck. You need patience.
What Are the Top 5 Index Funds in India for a Passive ₹10 Lakh Corpus?
Now let us talk about the main topic.
Here are the top 5 index funds in India for a passive ₹10 lakh corpus that many long term investors trust.
1. UTI Nifty 50 Index Fund Direct Plan
This is one of the oldest and most trusted index funds in India.
- It tracks the Nifty 50 index.
- It invests in India’s top 50 companies.
- It has a low expense ratio.
- It has a long and stable history.
This fund is often the first choice for people searching for Nifty 50 index funds direct plan. If you want simple, clean, and reliable investing, this fund fits well.
2. ICICI Prudential Nifty 50 Index Fund Direct Plan
This fund also tracks the Nifty 50 index.
- It is known for good tracking of the index.
- It has a strong fund house behind it.
- It suits investors who want stability.
Many investors compare this fund with UTI and choose based on comfort. Both are good options for passive investing.
3. SBI Nifty Index Fund Direct Plan
SBI is a trusted name in India.
- This index fund follows the Nifty 50.
- It is suitable for long term investors.
- It has a wide investor base.
People who trust government backed institutions often choose this fund. It is also a popular choice among those searching for index funds for passive income India.
4. HDFC Nifty 50 Index Fund Direct Plan
This fund is offered by HDFC Mutual Fund.
- It tracks the Nifty 50 index.
- It has good liquidity.
- It is suitable for long term wealth creation.
HDFC is known for stability and discipline. This fund is ideal if you already trust the HDFC brand.
5. Nippon India Nifty 50 Index Fund Direct Plan
This is another strong Nifty 50 index fund.
- It has a large asset base.
- It follows the index closely.
- It has competitive costs.
Many long term investors include this fund in their core portfolio.
Why Nifty 50 Index Funds Are So Popular
Nifty 50 represents the heart of the Indian economy. It includes companies from banking, IT, energy, FMCG, auto, and more. When India grows, these companies grow. That is why Nifty 50 index funds are considered safe for long term investing.
Should You Invest Entire ₹10 Lakh in One Index Fund?
You can, but you can also diversify. Here is a simple idea. Put 70 percent in Nifty 50 index fund and Put 30 percent in Nifty Next 50 or Nifty 500 index fund. This gives you balance. Large companies give stability. Slightly smaller companies give growth. This strategy is often suggested when people ask how to invest ₹10 lakh in index funds.
What Is the Best Way to Invest ₹10 Lakh?
There are two common ways: One time investment, Monthly SIP investment.
If you already have ₹10 lakh and do not want market timing stress, you can invest in parts over 6 to 12 months. If you are earning monthly, SIP is better. SIP helps you stay disciplined. SIP reduces fear. SIP builds habit.
What Are the Risks of Index Funds?
Index funds are safer than stock picking, but they are not risk free.
Market can go down in short term. Returns are not fixed. You must stay invested for long time. If you panic and sell early, index funds will not help. Patience is the biggest rule.
When Should You Invest in Index Funds?
The best time is when you have long term goals.
Retirement, Children education, Buying a house, Financial freedom. If your goal is more than 7 years away, index funds are suitable. Do not invest money that you need in one or two years.
Where Can You Buy Index Funds?
You can invest through many platforms.
Mutual fund websites, Investment apps, Banks, Registered advisors. Always choose the direct plan if you are confident. Direct plans have lower costs. Lower cost means higher return in long run.
How to Choose the Right Index Fund?
Here are simple points.
Check which index it tracks, Check expense ratio, Check how closely it follows index, Choose direct plan, Stay invested. Do not keep switching funds.
What Is the Difference Between Index Fund and ETF?
Many people ask this.
Index fund is bought like a mutual fund. ETF is bought like a share.
Index fund is simpler for beginners. ETF needs a demat account.
Both follow index. Both are passive.
Choose what you are comfortable with.
Can Index Funds Give Passive Income?
Index funds mainly give growth. They are better for wealth creation. Some dividends may come, but do not depend on it. If you want regular income, you can plan withdrawals after retirement. That is why many people search for index funds for passive income India.
Common Mistakes to Avoid
- Do not check daily NAV.
- Do not panic in market fall.
- Do not chase past returns.
- Do not invest for short term.
- Do not listen to noise.
Index investing is boring but rewarding.
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Real Life Example
Ramesh started investing in index funds in 2010. He invested regularly. He never stopped during market falls. Today, his portfolio is many times bigger. He did not do anything special. He just stayed patient. That is the power of index funds.
Final Thoughts
Index funds are not magic. They are not shortcuts. They are not exciting, but they work. If you want to build a passive ₹10 lakh corpus and grow it slowly and safely, index funds are one of the best options available today. Keep it simple. Stay invested. Give time. Your future self will thank you.
FAQs
- What are the best index funds in India for long term investment?
The best index funds in India for long term investment are those that track the Nifty 50 index. Popular options include UTI Nifty 50 Index Fund, ICICI Prudential Nifty 50 Index Fund, SBI Nifty Index Fund, HDFC Nifty 50 Index Fund, and Nippon India Nifty 50 Index Fund.
- Is investing ₹10 lakh in index funds safe?
Investing ₹10 lakh in index funds is considered safe for long term goals. Index funds invest in top companies of India and reduce risk through diversification. However, short term market ups and downs are normal.
- How to invest ₹10 lakh in index funds the right way?
You can invest ₹10 lakh either as a lump sum in parts or through monthly SIPs. Many investors prefer spreading the investment over 6 to 12 months to reduce market timing risk.
- Are index funds good for passive income in India?
Index funds are mainly meant for long term wealth growth, not regular income. However, after retirement, you can create passive income by withdrawing a fixed amount every year from your index fund investment.
- Which is better, index fund or active mutual fund?
For most long term investors, index funds are better because they have low costs, simple structure, and consistent returns over time. Many active funds fail to beat index funds in the long run.
