Before learning about how to become an investor in Nepal, let’s learn about who is an investor. An investor is a person who allocates money in the expectation of benefit in the future. The benefit of such an investment is called a return. Investors are constantly looking out for the possible investment opportunities where the rate of return is very high.
Based on a book written by Robert Kiyosaki Rich Dad Poor Dad, people can be divided into four distinct categories in terms of generating income. They are:
1. Employee (Salary-based) are the people working for others to meet their needs. They get a salary at the end of the month from their work. Job holders fall into this category. Employees have the benefit of security as they can be sure to get paid at the end of the month. However, the major drawback of being an employee is the lack of freedom.
2. Self-employed are the people who work for themselves. They enjoy more freedom than salary-based people but have to work like salary-based people to meet their demands.
3. Businessmen are the business owners. Businessmen hire other people to work for them. They create products and services to earn money.
4. Investors invest in others to make money.
According to the book, you should be either businessman or Investor or both in order to become a rich person.
Not all of your money spent can be viewed as investing. There are a few determining factors that separate spending vs investing. The two major characteristics that every investor should have are:
The principal is your machine that has the capacity of printing money for you. It should be your best interest to preserve your machine. When you lose your principal you cannot make money out of it. So, the safety of the principal should be your number one priority.
When you invest your principal into a good business, you get something in return. Your return can be in the form of cash, shares, or stocks. What you should remember is that your principal earns you some level of return. You should not expect exponential or even out of imagination to return from your investment. Investment with having a non-realistic expectation of return is mere gambling. Never gamble with your principal. It is all you have.
Inflation is a term that is used to describe the diminishing value of money over time. There is a popular saying ‘A dollar worth more today than a dollar tomorrow’. You, as an investor, have the capacity to beat inflation and maintain your money’s value as it is. You should always make a note about inflation and always try to beat inflation. Your return from an investment should always be higher than the inflation rate of your country.
It is another benefit of being an investor. You can own as many and as diverse companies as you can. What you should have are some investing principles that you can apply before investing. After you have set your investing principle, the world is yours to be taking.
There are three main popular fields of investing in Nepal. They are:
Real estate is and always has been the best investing area. Real estate investment provides you an income from two things – renting and selling your real estate. It can be your both form of investment – active as well as passive. You can actively buy and sell your properties or you can just invest in real estate and let the time to calculate your income. You can be always sure that your real estate value will increase with time. And in the meantime, you can use the money you get from renting to cover your day to day expenses.
Banks provide good interest rates for your fixed deposits savings in Nepal. For the safety of your principal, you can opt for fixed-deposit schemes provided by commercial banks or development banks in Nepal. While there are high rates of return from cooperative companies in Nepal, they have a bad reputation of fraud or scams. It is not advisable to deposit all of your money in cooperatives.
Also, there is peer-to-peer lending in Nepal. It provides a higher interest rate for your money than the institutions but also has higher risks.
Wherever you choose to invest, interest yielding deposits are one of the best passive income ideas in Nepal.
Nepal Stock Exchange (NEPSE) is the only stock exchange in Nepal. If you are new to this, you can check the beginner’s guide to NEPSE. Investing in stocks has two major advantages for you. You can be a shareholder of any companies you want and you will get return annually. Or, you can sell your stocks when its price goes higher. Similar to real estate investment, you can be either an active trader or a passive investor in stock investment. You can start investing in stocks from as little as 100 rupees. Stocks can be your next best small business in Nepal.
Furthermore, the best investment for you is the investment in yourself. Always expand your knowledge. Read books, websites, news, and become up to date. One of the common things all best investors have is they are avid readers. As there is a saying, the more you learn the more you earn.
Becoming an investor is no easy thing. It requires a certain principle and hard work to become a good investor in Nepal as well as in other countries. But, it is not as hard as learning rocket science. With sound planning and dedication, anyone can become a good investor. There are a few things you should not miss and a few things you should always remember. Happy investing.