Set It and Forget It
The Power of Passive Investing
The mid-morning sun filtered gently into the cabin of Bharadhwaj
Investsmart. Ranjit, a 52-year-old NRI and senior executive based in Dubai,
had just flown in for a brief visit to India. In the short window between
meetings, he had squeezed in time to visit Vaidy, his long-trusted financial
advisor.
“Vaidy, I have to be honest,” Ranjit began as he sipped his
coffee. “With my schedule, I can’t track markets daily or even monthly. I want
something solid, long-term, and low-maintenance. Is there a way to build wealth
passively, without me staring at market tickers?”
Vaidy smiled knowingly. “That’s exactly what passive investing
is for, Ranjit. And you’re not alone - many NRIs and busy professionals face the
same dilemma. Let’s set up a portfolio that works while you work.”
Just then, Srini, Vaidy’s brother and a Chartered Accountant,
walked in. “Hi Ranjit, mind if I join?”
The three shared a laugh, and the conversation turned serious.
1. Start with a Core of Large Cap Mutual Funds
“First,” Vaidy said, “you need stability. Large Cap Mutual
Funds are perfect for that. They invest in well-established companies, often
leaders in their industries. These funds tend to be less volatile and are ideal
for someone like you who wants peace of mind.”
Srini added, “Also, they’re professionally managed. You don’t
need to do any stock picking. Just invest and review once a year.”
2. Add ETFs for Low-Cost Market Exposure
“Exchange Traded Funds (ETFs),” Vaidy continued, “are another
pillar. Think of them as mutual funds that trade like stocks. They track
indexes like the Nifty 50 or Sensex and come with very low expense ratios.”
Ranjit leaned in, interested. “So I get market returns without
high fees?”
“Exactly,” Srini confirmed. “And if you pick ETFs with global
exposure, you can diversify geographically too.”
3. Automate Through SIPs and STPs
“To make this hands-off,” Vaidy said, “use Systematic
Investment Plans (SIPs). Just set a monthly amount, and it gets invested
automatically. For larger lump sums, you can park the funds in a liquid fund
and move them via Systematic Transfer Plans (STPs) into equity.”
Ranjit nodded. “This sounds just like what I need - automation
with discipline.”
4. Periodic Rebalancing – Once a Year Is Enough
“You don’t need to check your portfolio daily,” Srini assured
him. “Just once a year, review the asset allocation. Rebalancing keeps your
risk profile intact.”
“And we can help with that,” Vaidy added. “Even a quick online
meeting works.”
Ranjit stood up, smiling with relief. “I feel lighter already.
This makes sense - and it's manageable.”
As he left the cabin, Vaidy and Srini exchanged a look of
satisfaction. Another investor, another smart plan.
The content made available in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation.
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