Making investments is one of life’s most challenging tasks. The majority of these choices are made with the person’s future needs in mind. These investments are typically made in a variety of assets, including real estate, fixed deposits, bonds, mutual funds, precious metals, stock market, etc. One often delays present consumption in an effort to gain more in the future and invests the available funds in one or more investment products. One of the most profitable investments is making direct stock purchases on the equity market.
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Meaning of SIP
Most portfolio managers and investors who invest in the stock market, particularly in mutual funds, adopt this straightforward strategy. In this strategy, a set amount of money is invested each month regardless of the direction of the stock market, whether prices are high or low. Regular investments made with a defined investment amount allow investors to buy more equities when the price is low and fewer shares when the price is high.
Investors typically act in the opposite direction. When regular investments are made over a lengthy period of time, SIP is beneficial.
So, an investor must invest the same amount of money in a specific mutual fund at each predetermined time period under a systematic investing plan. By investing in SIP, a person can participate in the stock market without actively timing it and profit by purchasing more units when the price is falling and less units when the price is rising. In short, SIP is an way of investing not an systematic tool.
Systenatic Investment Plan (SIP) in Nepal
The are currently seven Systematic Investment Plan (SIP) in Nepal. Instead of investing all at once, SIP enables investors to invest in mutual fund schemes on a regular basis (monthly, quarterly, semi-annually, or yearly) with a minimum commitment of Rs 1000 in Nepal. As of August 4th, 2023, options for systematic investment plans are offered by Nepal’s seven open-ended mutual funds (NIBLSF, SSIS, NMBSBE, NADDF, SLK, KSLY, NFCF). Through an online application form, SIP registration is possible in Nepal. The Seven SIP forms of Nepal are:
- Siddhartha Systematic Investment Scheme (SSIS)
- NIBL Sahabhagita Fund (NIBLSF)
- NMB Saral Bachat Fund-E (NMBSBE)
- NIC Asia Dynamic Fund (NADDF)
- Kumari Sunaulo Lagani Yojana
- Subha Laxmi Kosh
- Nabil Flexi Cap Fund
Benefits of SIP
- Power Of Compounding: The top of the list has to include this. SIP enables investors to take advantage of compounding’s advantages. Dividend Reinvestment Plans, also known as DREPs, are available from all Nepali SIP providers and allow investors to reinvest the returns on their investments, potentially generating exponential growth over time.
- Disciplined Investing: SIPs encourage disciplined and routine investing because participants agree to make a set amount of investments at predetermined periods. This promotes the development of a regular saving and investment habit. The ability to become a disciplined investor is SIP’s additional benefit. Once you start a SIP, you are required to make a monthly contribution to a mutual fund, cultivating the habit.
- Diversification: SIPs give investors access to a diverse array of securities, particularly when it comes to mutual funds. By distributing investments among several assets, diversification helps to lower risk. Also, the idea of rupee-cost averaging is SIP’s main benefit. SIP enables you to purchase more units when the market declines and less units when the market rises.
However, the major disadvantage of SIP is, When a market increases in value over time, the units that are purchased each time are at a higher price than the one that was purchased previously. This might ultimately increase the average worth relative to the initial lump sum investment.
SIP Registration In Nepal
To register in SIP you should have the following account and all account open online. Also, you can apply SIP from abroad as well. All you need to have is mero share and DEMAT account. There are different way to pay for SIP which are connect IPS, ESEWA, Khalti and capital’s bank.
- DEMAT Account – BOID No.,
- Meroshare (Screenshot of Profile Page),
- Bank account (Any Bank) and,
- Copy of Citizenship (Take Photo)
How To start SIP in Nepal
- Choose mutual Fund Scheme: Based on investing objectives, risk tolerance, and fund performance, choose a mutual fund strategy
- Register For SIP: After you choose the mutual fund scheme, you should register for SIP. Most of the mutual fund allows applicant to register through online but for that you need to have DEMAT and Mero Share account.
- Choose investment amount and frequency: Choose the amount and frequency of your recurring investments from options like monthly, quarterly, semi-annually, and yearly.
- Start and Monitor your Investment: A long-term investing strategy is the systematic investment plan. Depending on your needs, you can increase or decrease your investment. Also, Keep a close eye on the performance of your investments and adjust as necessary.
In short, To register a SIP in Nepal, you must first select the finest SIP. Your SIP plan can now be easily registered through an online interface.
Visit the website of the capital companies where you want to register your SIP after selecting the finest SIP. For instance, if you select the Nabil Flexi Cap Fund for SIP, you must go to the Nabil Investment Banking Limited website.
You must complete the online form and attach the required documents when you visit the website (the internet links are provided above in the SIPs in Nepal section).
You will be asked to pay the first installment of your investment after completing the form. You must make your payment via an online payment system like eSewa, Connect IPS, etc.
You will receive your login information through email after making the first payment on your investment. You can complete the remaining steps, such as making payments and monitoring your SIP status online, by using that user ID and your password.
In conclusion, SIP investments provide a possibility for capital growth. In Nepal, there are several SIP options. Six of the more than 35 mutual funds are open-ended.
Systematic Investment Plan (SIP) investments are often made in open-ended mutual funds. Financial market investment does not ensure a return on investment.
It’s crucial to investigate and evaluate the specific investing field you wish to pursue. If you’re eager to invest in a SIP, you can participate through online platforms and have a variety of options.
I provide the couple of links to open the online account
- Bank Account: https://www.nicasiabank.com/savings/sarbashrestha-sunya-maujdat-bachat-khata/ ( PP size photo and valid photo ID)
For video KYC : https://www.nicasiabank.com/video-kyc/
- DEMAT account Open: https://onlinedemat.nicasiacapital.com/#/login
(sign up and proceed )
- Mero Share and CRN request: https://meroshare.nicasiabank.com/capital
- Connect IPS : https://www.connectips.com/
- SIP Registration: https://mutualfund.nimbacecapital.com/SIP/Registration
So all above links help you to open the different accounts. Its not recommended and you should do your own analysis before you open the any account and investment. Also, you can open all accounts from abroad as well.