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Introduction
Are you new to investing and unsure where to start? Don’t worry—you’re in the right place! In this article, I’ll introduce you to the simplest MTF strategy (Margin Trade Facility). It’s perfect for first-time investors looking to earn money and build long-term wealth.
This strategy covers everything: how to adjust, book profits, and use MTF effectively. If you want to dive deeper, check out the MTF series I’ve linked. But even if you’re starting from scratch, this guide will be clear and actionable.
Don’t let reading hold you back, Watch our video instead
What is Nifty Bees?
At the heart of this strategy is Nifty Bees—a Nifty Exchange Traded Fund (ETF). It works like a mutual fund but trades on the stock exchange like a stock. Nifty Bees make investing simple and efficient, especially for beginners.
Here’s why they’re ideal for newcomers:
1. Buy/Sell Anytime
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Nifty Bees can be bought or sold during stock market hours.
2. No Analysis Required
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Nifty Bees track the Nifty 50 index, which includes India’s top 50 companies. There’s no need to research individual stocks or analyze charts.
3. Low Risk
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Nifty Bees diversify your investment across 50 companies in different sectors. Even if some companies underperform, others will balance it out.
Why Is This the Simplest Strategy?
1. No Research Needed
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The Nifty 50 index already includes India’s top-performing companies. By investing in Nifty Bees, you’re investing in these leaders without tracking stock performance or news.
2. Built-in Diversification
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Nifty Bees automatically spread your money across 50 companies, reducing risk. Unlike holding just 1-2 stocks (where poor performance could hurt you), Nifty Bees are balanced by stronger companies in the index.
3. Stable Returns
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Historically, the Nifty 50 has delivered an average annual return of 14.6% over 20 years. Even with a conservative estimate of 12%, you can boost your returns to 18-20% annually using MTF.
Why Is This the Safest Strategy?
1. Blue-Chip Companies
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Nifty Bees invest in blue-chip companies, which are leaders in their respective sectors. These companies are financially strong and more stable than small or mid-cap stocks.
2. Long-Term Growth
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With a long-term perspective (3-5 years or more), market fluctuations tend to smooth out. Over time, large companies grow steadily, reducing the stress of short-term volatility.
Why Is This the Cheapest Strategy?
1. Lower Transaction Costs
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Nifty Bees reduce frequent buying and selling, saving you brokerage fees, taxes, and other charges. For example, platforms like Zerodha charge only ₹20 per trade.
2. Low Management Fees
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Nifty ETFs are passively managed, which keeps fees as low as 0.06%, compared to mutual funds that charge 1-2%.
3. No Expensive Tools
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Since there’s no need to analyze charts or data, you save money on premium tools or subscriptions.
4. Cost-Effective Funding with MTF
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With MTF, you can leverage your money. For instance, to create a ₹10 lakh portfolio, you only need ₹2.5 lakh—the broker funds the rest. This 3x leverage maximizes the potential of your capital.
How to Start with MTF
1. Initial Investment
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Start with ₹2.5 lakh or set up a Systematic Investment Plan (SIP) of ₹50,000 per month.
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Spread your investment over 5 months to average out costs, especially if the market dips.
2. Keep a 20% Cash Buffer
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Always maintain 20% of your total investment in cash or liquid funds. This acts as a safety net against margin calls during market downturns.
How to Book Profits
1. Sell When Nifty Hits New Highs
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For example, if the Nifty moves from 26,800 to 27,000 or higher, sell 30-50% of your portfolio to lock in profits.
2. Reinvest After Market Corrections
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After the market dips, reinvest the profits gradually using SIPs or as a lump sum when prices are favorable.
When to Average Down
1. Double Your SIP During Corrections
If the Nifty drops by 5% or more, increase your monthly SIP:
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Normal SIP: ₹50,000
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During a 5% correction: ₹1,00,000