Exactly How Much Money Is Needed To Invest in NEPSE?

The fact that you want to know the answer to this means that you are a beginner in this. First of all, welcome to the fabulous world of investing!

Like in other countries, Nepal has a stock exchange for the trading of stocks of companies. The stock exchange is simply called the Nepal Stock Exchange, or NEPSE.

To understand just exactly how much money is needed to enter the stock market of Nepal, you should first know the types of investing in NEPSE.

1) Investing via the primary market (IPO)
2) Investing in Mutual Funds and Debentures
3) Investing in the Secondary Market (The Real Stock trading and Stock Investing)

1) Investing via the primary market (IPO)

An IPO is a way for companies to be public. Being public means that the company accepts investment from the general public. All the companies that are listed in NEPSE issued an IPO in the past.

For a new company to be public and be listed in the Nepalese Stock Exchange, it has to issue an IPO. People can invest their money in these IPOs. For instance, just a few weeks back, Prabhu Life Insurance Company Limited issued an IPO and I (the author of this article) was allotted 10 shares.

With a few exceptions, people investing in IPOs get a guaranteed profit. This is because an IPO is issued at Rs. 100 per share. And when the same shares are listed in NEPSE, they generally get listed at a higher price. For instance, the IPO shares of Reliance Life Insurance got listed in NEPSE at Rs. 322 per share on the first trading day.

Are you with me?

What this means is that investing in IPO is extremely profitable. Now, logically, everyone is interested to take a piece of this profitable thing. This is why the IPO of good companies receive applications from a heck lot of people than required. This reduces the chances of getting the shares allotted. And even if you do get the shares, you may actually get 10 units only.

Therefore, in most IPOs, you do not need to have more than Rs. 1000 to invest in the shares. Why? Because there is a high probability of getting only 10 units and each unit of share costs Rs. 100. Simple math.

2) Investing in Mutual Funds and Debentures

Mutual funds and debentures are relatively safer investment vehicles.

Specifically, Debentures are 100% safe. For instance, there is a debenture called “10.25% BOK Debenture 2086.” What this means is, from the year that this debenture was established, it will give 10.25% returns each year. So, if you had invested Rs. 50,000, you will get 10.25%, i.e. Rs. 5,125 every year doing nothing.

“BOK Debenture” simply means that the Bank of Kathmandu Limited issued this Debenture.

What does 2086 mean then? It simply means that this debenture will expire on 2086 BS. At the end of 2086 BS, the bank will return your initial capital. However, if you need your money back before this date, you can simply trade the debenture on the secondary market but that’s not the topic of discussion at the moment.

Unlike the IPOs of companies, debentures have a par value of Rs. 1000. For the time being, just understand that the par value is the price of one unit of a debenture. The minimum number of units to be applied for is 25 units. Thus, if you have Rs. 25,000, you can apply for a debenture.

On the other hand, mutual funds are investment vehicles that smoothen investment risk. They do carry the risk but they are considered safer than investing directly in NEPSE. However, they are also less profitable than investing in NEPSE directly.

Mutual funds have a par value of Rs. 10. The minimum number of units to be applied for is 100 units. Thus, like in IPOs, if you have Rs. 1,000, you can easily apply for a mutual fund.

3) Investing in the Secondary Market (The Real Stock trading and Stock Investing)

Like I already said, after a company issues its IPO, it is listed in NEPSE.

NEPSE then determines the opening price range for the company on its first trading day. After the first transaction is done in the range given by NEPSE, the stock price is now completely in the hands of investors.

Investors then take the price depending on the company fundamentals, profitability, growth potential, and a myriad other factors. They do so by buying and selling the shares.

The minimum quantity of shares that can be bought in one transaction is 10 units. This is the rule no matter the stock price of the company whose shares you want to buy.

For instance, Unilever Nepal Limited (UNL) is currently the most expensive stock in NEPSE. The stock price of UNL stands at Rs. 19,110. So, since you must buy at least 10 units in a transaction, you need Rs. 1,91,100 to buy the shares of UNL.

On the other hand, Machhapuchchhre Bank Limited (MBL) has a stock price of Rs. 260 per share. Thus, even if you have only Rs. 2,600, you can buy the minimum 10 unit shares of Machhapuchchhre Bank.

Wrapping Up:

That is all you need to know about how much money is needed to invest in NEPSE. Hope you get to a point where you have to ask questions about how much maximum amount can be invested in NEPSE. *giggles*

I am the first to post about new IPO dates, dividend news, and everything about the stock market on my Instagram page. Follow me on Insta at @nepsetrader.

i) I have ignored the minimum application fee needed to invest in IPO, mutual funds, and debentures. For example, a fee of Rs. 10 is deducted from your bank account after you apply for an IPO. Similarly, while buying and selling the shares in the secondary market, you will need to pay a minimal commission and charges on each transaction.

ii) I only talked about the minimum amount needed to invest in NEPSE. Of course, for a significant gain, you may want to invest a bigger amount than the bare minimum.

iii) You need to have a Demat account to invest in NEPSE. If you want to apply for IPOs online from the comfort of your own home (or anywhere), you will need a Meroshare account. Finally, in order to buy or sell shares in NEPSE’s secondary market, you will need to have a broker account.

2 thoughts on “Exactly How Much Money Is Needed To Invest in NEPSE?

  1. For e.g.If I have Total share value amount = 25000 for an IPO of 10 kitta
    After selling it how much I will get in my bank account.

  2. Hi, Subodh.

    You’ll get slightly less than Rs. 25,000 itself. A tiny chunk is deducted as broker commission and capital gain tax.

    To calculate the net profit, simply substract your initial investment of Rs. 1,000 from the amount your broker pays you in the bank.

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