Systematic Investment Plans (SIP) are gaining popularity in Nepal as a disciplined method of investing in mutual funds. Here’s a thorough description of how SIP works in Nepal, including the different alternatives and how to select the best plan.
Understanding SIP in Nepal: SIP allows investors to make recurring contributions (monthly, quarterly, or annually) to a mutual fund. It contributes to wealth growth by smoothing out market swings and reaping the benefits of compounding over time.
Available SIP Plans in Nepal: In Nepal, SIP investments are mostly made through mutual funds administered by several asset management firms (AMCs). Some popular mutual funds include:
a) Equity-based mutual funds (high risk, high returns)
- Invest largely in stock (NEPSE-listed firms).
- Ideal for long-term investors looking for bigger profits.
b) Debt-based mutual funds (low risk, steady returns)
- Invest in government bonds, debentures, and fixed income assets.
- Perfect for conservative investors.
c) Hybrid/Balanced Mutual Funds: Moderate Risk, Balanced Growth
- A combination of stock and loan investments.
- Suitable for those seeking a mix of risk and return.
Some of the popular mutual fund schemes in Nepal include:
- NIBL Sahabhagita Fund
- NIC Asia Growth Fund
- Sanima Equity Fund
- NMB Hybrid Fund
- Global IME Samunnat Scheme
How to Choose the Best SIP Plan in Nepal?
To choose the finest SIP plan, examine the following considerations.
- Investment Goal: Will you invest for retirement, education, or wealth creation?
- Risk Tolerance: Equity SIPs are high-risk but give significant returns, while debt funds are low-risk and steady.
- 100% Fund Performance: Review the fund’s historical returns for the past 3, 5, and 10 years.
- Expense Ratio: Lower expenses equal higher profits for investors.
- Fund Manager Experience: Select a well-managed fund with an experienced portfolio manager.
How to Start SIP Investment in Nepal?
- Step 1: Choose a mutual fund or asset management organisation.
- Step 2: Create a Demat and Mero Share account (needed for transactions)
- Step 3: Select SIP amount and frequency (monthly, quarterly, etc.)
- Step 4: Sign up for a SIP plan with a bank or broker.
- Step 5: Review and monitor your investment regularly.
Taxation on SIP in Nepal
Dividend Tax: Withholding tax applies to mutual fund dividends.
Capital Gains Tax (CGT):
- Short-term profits (under one year) are taxed at a higher rate.
- Long-term profits (over one year) may be taxed at a reduced rate.
SIP Wealth Creation Strategy for 2025
🚀 Start Early: To maximise compounding gains, start early.
đź“Š Diversify Investments: By investing in different SIP plans (equity, debt, and hybrid) to minimise risk.
📉 Invest during market dips: Purchase more units when NAV is low for long-term gain.
🔄 Review periodically: Monitor fund performance and make necessary adjustments to investments.
Conclusion: SIPs in Nepal are an excellent strategy to accumulate long-term wealth via disciplined investment. Investors may achieve considerable financial gain by selecting the right funds, diversifying their portfolios, and checking them regularly.
