Nepalese Investor

Know Everything About Systematic Investment Plan (SIP)

SIP Investments - Systematic Investment Plan
SIP Investments - Systematic Investment Plan

Systematic Investment Plan (SIP) is a investment strategy whereby investors make a regular equal payments into mutual funds for the purpose of investing. Through SIP, investors can invest a small amount of money regularly without the burden of having to invest huge amount at once.

Investment can be started with a small amount of Rs 1000 and interval can be monthly, quarterly, semi-annually or annually. SIP has been gaining popularity among Nepalese Investors because it allows investors to invest a small amount of money regularly and for a longer period of time.

SIP helps you average your investment cost which reduce risk and increase your rate of return though the power of compounding. Systematic Investment Plan works best when you start investing early and regularly for a longer period of time.

How Systematic Investment Plan (SIP) Works ?

SIP Mutual Fund allows investor to invest a small amount of money regularly for longer period of time. You invest money to buy same security at different price for a certain period of time. When the market price rises, you get fewer units and when the market price falls, you get more units. This way it helps to reduce your cost of investment in the long run.

It is the disciplined approach to investment where the money grows exponentially through the power of compounding. You earn returns on your investment and also return on your returns.

You can also use our SIP Calculator to keep tracks of your SIP investment in Nepal. This mutual fund calculator helps know about projected returns according to change in your monthly contribution, investment tenure and expected annual return.

SIP Mutual Funds in Nepal

In Nepal, the financial market has witnessed significant growth in recent years, particularly in the realm of mutual funds. As Nepal’s financial sector continues to evolve, these SIP-oriented mutual funds play a vital role in empowering investors with diverse investment opportunities and facilitating their financial growth.

Notably, five prominent SIP Mutual Funds operate in Nepal, catering to the growing demand for SIPs. The table below presents the list of SIP Mutual Funds operating in Nepal.

S.N. Mutual Fund Fund Manager
1
NIBL Sahabhagita Fund
NIMB Ace Capital Limited
2
Nic Asia Dynamic Debt Fund
NIC Asia Capital
3
NMB Saral Bachat Fund – E
NMB Capital
4
Siddhartha Systematic Investment Scheme (SSIS)
Siddhartha Capital
5
NABIL Flexi Cap Fund
NABIL Invest

Benefits of Systematic Investment Plan (SIP)

SIP has been gaining popularity in Nepal because of its convenience in achieving financial goals. Here, we have listed out the benefits of Systematic Investment Plan (SIP) :

Power Of Compounding

By investing in SIP and reinvesting your dividend, you earn return on your returns of investment. This help to grow your money exponentially. Example: Ram started investing Rs 2000/month at the age of 20. Similarly, Shyam started investing Rs 3000/month at the age of 35. Both invested regularly till the age of 60 and got an average return of 12% per annum.

Now, Ram invested for 40 years and Shyam invested for 25 years at 12% return per annum. Ram will have a total of Rs 2,37,64,840.47 and Shyam will have a total of Rs 56,92,905.28. Ram will have higher amount of money because Ram invested regularly for a longer period of time.

Average Costing

As you buy the same security for different price at different times, the cost of your investment is reduced. Regular investing ensures that average costing is ensured which increases the profitability of your investment.

Lower Risk

Risk on your investment is reduced as you invest small amount at different times. You can easily monitor how the security is performing and change the investment strategy accordingly.

Flexibility

You can at anytime increase or decrease the amount of your regular investment. You can also switch intervals into monthly, quarterly, semi-annually or annually.

FAQS on Systematic Investment Plan ( SIP )

We have answered to some frequently asked questions by investors about SIP in here.

You can Invest in SIP Mutual Funds in Nepal by simply visiting branch offices of SIP service providers or through online from their website.

You can start investing in SIP with investment as low as Rs 1000. Interval of your investments can be monthly, quarterly, semi-annually or annually.

NAV stands for Net Asset Value. It is the price at which units of mutual funds can be purchased or sold. When an investor pays the installment then the cost of purchase for units is as per the prevailing NAV.

 

Conclusion

Systematic Investment Plan ( SIP ) is a popular investment strategy among Nepalese Investors. As it can be started with small amount in a regular basis, it helps to build investment habit in the people.

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