Systematic Investment in Shares (SIP in Shares): A Concept for the Nepali Market

We often hear about Systematic Investment Plans (SIPs)—a structured way of investing regularly in mutual funds. SIPs help individuals invest in a disciplined manner, removing emotional decision-making and promoting long-term wealth building.

But what if we apply this same strategy to direct investment in shares?

Introducing SIP in Shares:

Systematic Investment in shares (SIP in shares) is nothing but just a concept where you will be investing regularly in shares in the secondary market. This approach will help you get the averaging effect of fluctuation in price of shares in the secondary market over time without putting any stress on your financial part.

Some points to be kept in mind for starting your SIP in shares:

1. You will be investing a fixed amount of money on a monthly basis for the purchase of preferred shares on the secondary market.

2. First, access your monthly limit that you can invest in the secondary market, & that monthly investment should last for a specific period of time, i.e., for say 5 years. Make sure you invest a minimum of 10 units of any share. You can invest in any number of shares depending upon your investment appetite.

3. You need to set a time limit for investment. For say, you set your investment time for any month for the 1st to 7th of the following month. 

4. You will be investing the specified amount at the set time in point no. 3 at the prevailing market price on the set date.

This will help you average the price fluctuating over time, accumulate the shares & make investments in the systematic approach based on your own defined investment limit & time frame.

Make sure you set your investment limit, monthly investment time frame, and period of investment (make sure you set a bit long time frame) and stay consistent on your defined plan.
 
Let me demonstrate with an example.

Let's take Nepal Life Insurance Company Limited (NLIC) for systematic investment in shares. You set aside 10,000 per month from your monthly income for investment in shares of NLIC starting from Baisakh 2082 for a time period of 5 years. You set your monthly time frame for monthly systematic investment for the 1st to 7th of the next month, i.e., the 1st to 7th of Jestha 2082.

Every month, you invest NPR 10,000 to buy NLIC shares at that month's market price. Over time, you accumulate a significant number of shares while averaging out price volatility.

Note: Systematic investment in shares is a conceptual framework for systematic investment in shares for long-term accumulation of shares, enjoying the averaging in fluctuation of prices in the share market, and continuous investment in shares leads to a compounding effect in a defined period of time. Also, you can define your goal according to your situation. There is no hard and fast rule under this approach. The only thing you should keep in mind is a disciplined and structured approach to investment.

Article By: Manish Thapaliya