SIP in Nepal: A Future Financial Growth

Introduction towards Systematic Investment Plans (SIPs) 

A Systematic Investment Plans (SIPs) is a process of investing the fixed amount in a mutual fund. SIP allows investors to purchase a unit periodically at different price points. SIP is like your partner which provides you with reliability, consistent for the long term.This a Discipline approach towards your habit for regular saving. SIP investment is a smart investment for your future financial support and growth. SIP is a long term wealth creation, making it an attractive option for a Citizen,small and medium scale investor. 

Importance of Systematic Investment Plans (SIPs) 

SIP is a Discipline way of saving your income for a future. It will protect for a future financial security for wealth creation. SIP provides Discipline and flexible components for people with different  income levels and financial goals.

Key Importance for SIP

• Flexibility to increase, decrease, or pause Investment as per financial circumstances 

• Financial Stability for long term 

• Power of compounding enables money to grow exponentially 

• Affordable Investment 

• Allows buyer to buy a units when then are low unit price and fewer when they are at high price which is also known as Rupee cost Averaging 

• High return in long term 

How Systematic Investment Plans (SIPs) Work ? 

SIP works on the Principle of Compounding and Rupee cost Averaging. This Principle gives a clear understanding, how SIP works. Once you get ideas and clear understanding you can drive your investment journey smoothly and consistently. 

Power of Compounding 

A tiny seed, with proper care and time, grows into a massive tree. That’s What happens when you let it grow your money in compounding with proper time on investment and with proper plan. 

Here how compounding works

Let’s take an example, you have invested Rs.1000 yearly and it earns a 12% Interest rate each year. In First year you will earn Rs.120. If you leave that Rs.120 in your investment, the next year you will earn interest not just on your original Rs. 1,000, but also on the Rs. 120 you earned in the first year. 

Let’s make a 5 year SIP plan in table by assuming RS. 1000 investment for each year at a 12% Interest rate.

Additionally, The process of gaining returns on both the initial investment amount and on the returns that have already been received is known as the power of compounding. This keeps occurring and can have a significant impact on the growth of your investment over time. Hence, You can Invest your money annually, semi-annually, quarterly and monthly. 

Rupee Cost Averaging 

Rupee Cost Averaging is a smart way of investing money where you invest a fixed amount regularly, no matter whether prices go up or down. Over time, this helps you buy more units when prices are low and fewer units when prices are high, balancing the cost of your investment.

How Rupee Cost Averaging Works

Let’s take an example you Invest RS. 1000 every months in mutual funds through SIP, here how it works 

Total amount Invested: Rs.4000 (Rs.1000 each months) 

Amount Invested / Price Per unit = units boughts

Example

1000 / 10 = 100 units 

Total units Boughts: 100+125+83.33+111.11 = 419.44 Units

Average Cost per unit = Total amount Invested / Total unit Bought 

Example

4000 / 419.44 = Rs.9.53

What Happened?

Even though the price changed every week:

• When prices were low, you got more units.

• When prices were high, you got fewer units

• The average cost Rs.9.53 is lower than the highest price Rs.12 because you bought more units when prices were lower.

Over time, this balanced the cost, and you didn’t overpay even when the price went up.

Benefits of Systematic Investment Plans (SIPs) in Nepal

Benefits of SIP lies in its reliability, consistency, simplicity and accessibility. It offers encouragement for long term financial growth, Discipline in your Investment journey. When you save your money regularly it sets a habit, which will be tough to break. Investing in SIPs makes it simple to take money out when you need it. This is useful when you have specific financial goals or in an emergency. Investing in SIPs allows you to skip installments or gives you the freedom to change your investment amount without any extra fees. This flexibility helps you reach your financial goals more easily.

Some of the benefits of Systematic Investment Plans are

• Power of Compounding

• Rupees Cost Averaging 

• Flexible Investment

• Discipline Financial Planning 

• Investing for Certain Goals 

Systematic Investment Plans (SIPs) Investment in Nepal 

In Nepal, SIPs are gaining popularity in Nepal as a best and easy investment way in mutual funds for financial growth. They offer a range of advantages, especially for those looking to secure their financial future.

SIP Investment in Nepal provides

• Power of Compounding 

• Rupees Cost Averaging 

• Flexibility 

• Protection against inflation 

• Low Risk 

Steps to Invest Systematic Investment Plans (SIPs) in Nepal 

Here are some steps to Invest in SIPs in Nepal 

1. Get a Demat Account

• Open a Demat account at any bank. This is where your investments will be stored.

2. Pick the Right Fund

• Choose a fund based on:

• Your goals (e.g., saving for education or retirement).

• Your risk level (low, medium, or high risk).

3. Find a Reliable Investment Company

• Select an experienced and trustworthy company to handle your SIP investments.

4. Complete KYC (Know Your Customer)

• You’ll need to provide personal details like your ID and address to complete the KYC process, which is required for all investors.

5. Start Investing

• Decide how much to invest each month (e.g., Rs.2000).

• Use your bank account or digital wallet to make regular payments.

Banks that provide Systematic Investment Plans (SIPs) In Nepal 

Here are some trusted banks that provides SIPs in Nepal 

1. NIBL Sahabhagita Fund by NIBL Capital Markets.

2. Siddhartha Systematic Investment Plan by Siddhartha Capital.

3. NMB Saral Bachat Fund-E by NMB Capital.

4. NIC Asia Dynamic Debt Fund by NIC Asia Capital.

5. Subha Laxmi Kosh by Laxmi Capital.

6. Nabil Flexi Cap Fund by Nabil Investment Banking.

Frequently Asked Question (F&Q)

1. Are returns from SIP taxable in Nepal?

Returns from mutual funds are subject to Nepal’s tax laws. Check with your financial advisor for current tax implications on your SIP investments.

2. Can I withdraw money from my SIP?

Yes, SIPs allow you to withdraw money partially or fully, depending on your needs. However, withdrawing too soon may affect your long-term wealth-building goals.

3. Is SIP suitable for short-term goals?

SIP is ideal for long-term wealth creation. However, it can also be tailored for medium-term goals like education or buying a car, depending on the fund you choose.

4. How much should I invest in a SIP?

The amount depends on your financial goals, income level, and risk appetite. You can start with as little as Rs. 500 or Rs. 1000 monthly and gradually increase it as your financial capacity grows.

Plan your SIP from : SIP Calculator