New Delhi, Sept. 26 -- Passive investing means putting money into investments that follow a market index. The aim is to earn returns close to that index, after accounting for costs. It usually involves holding investments for years and avoiding frequent buying or selling.

An index measures the performance of a group of investments. In India, examples include the Nifty 50 and Sensex. Think of an index as a basket containing shares from different companies. A fund that follows that index aims to replicate the basket and its proportions.

For example, imagine you put Rs.1,000 into a Nifty 50 index fund. Your money joins other investors' money to buy shares that track that index. You do not need to choose each company yourself. However, you ...