NEPSE vs SIP vs FD for a 25-year-old in Kathmandu

A cousin called me last Saturday. He's 26, two years into his first real job, just got a promotion. After PF, SSF, rent, food, and the usual outgoings, about रू 12,000 a month sits idle. The question he was chewing on: "FD ho ki share?"

A fair question, framed too tightly. At 25 the honest answer isn't one of the three. It's a small allocation across all three, weighted toward whatever can compound for 35 years without making you panic out of it.

This post is for him, and for anyone sitting in the same spot. It assumes the basics are already handled: a three-month emergency fund in a savings account, PF/SSF running through payroll, and some CIT going if your tax slab makes the math work. If not, start with the salary-slip walkthrough and the savings-rate post. Those come before this conversation.

The compounding window is the whole game

Before any vehicle comparison, sit with this number.

रू 5,000 a month into something that compounds at 10% a year (a conservative long-run estimate for Nepali equity, drawdowns included):

Start age	End age	Final balance
25	60	~रू 1.9 crore
30	60	~रू 1.13 crore
35	60	~रू 66 lakh
40	60	~रू 38 lakh

The 25-year-old ends up with roughly 3× the 35-year-old's pile on the same monthly contribution. Those 10 years of head start aren't worth 10 years of contributions. They're worth a multiple of the entire final number, because compounding isn't linear.

So at 25 the urgency isn't to pick the perfect vehicle. It's to start anything equity-flavoured this month, even at रू 1,000–2,000, and let 35 years do what 35 years do. Optimising comes later.

The three vehicles, framed for your age

You already know roughly what each one is. Here's how each looks with 35 years ahead of you.

NEPSE direct

What it is. You open a DEMAT and MeroShare account, link a broker, and buy individual companies: NABIL, NIB, NLG, Chilime, Upper Tamakoshi, the IPOs that show up every quarter, whatever you've researched and decided on.

Where it shines at 25. Agency. You learn how Nepali businesses actually run by watching a handful of them quarter by quarter. The IPO allotment lottery occasionally hands you free returns. An allotted IPO listing 60–80% above issue is not uncommon, though getting allotted is itself a probability game.

Where it bites. The temperament tax. NEPSE lost about 41.5% from its August 2021 peak to mid-2022, and individual stocks can drop further. Sitting on a stock that's 40% under your buy price for 18 months while your friends post screenshots of gains in something else is the psychological challenge of direct equity. Most people sell at the bottom and buy at the top.

Honest fit at 25. A sleeve, not the core. 15–25% of your investable money is plenty if you actually enjoy reading annual reports. If you don't, a SIP gives you 80% of the equity exposure with 5% of the stress.

Mutual fund SIP

What it is. A monthly auto-debit into a NEPSE-listed mutual fund scheme, run by firms like Nabil Investment Banking, NMB Capital, Siddhartha Capital, NIBL Ace Capital, NIC Asia Capital, and others. There are 10+ live schemes on NEPSE at any time. The fund manager picks the stocks. You decide how much per month and for how long.

Where it shines at 25. Discipline by default. The auto-debit kills the "should I invest this month?" question that quietly costs people years of contributions. Rupee-cost averaging means a NEPSE drawdown buys you more units at lower NAVs, which is exactly what you want when the recovery shows up.

Where it bites. Scheme selection matters and fees vary. Read each scheme's prospectus for management-fee and expense breakdown before committing. Some closed-end schemes trade at a discount or premium to NAV on NEPSE. Buy near NAV, not at a 15% premium.

Honest fit at 25. The default core. 50–70% of long-term money lives here. A simple single-scheme SIP that you leave alone for the first 5 years beats a "diversified" portfolio across six schemes you swap in and out of based on last year's returns.

Fixed deposit

What it is. A bank deposit at a fixed rate for a fixed term, usually 1, 2, 3, or 5 years. Currently around 5–6% gross at most commercial banks (top end ~5.5% on 1-year), with 6% TDS on interest, from the first rupee.

Where it shines at 25. Predictability for things you actually need. A down payment in 4 years. A wedding budget. An emergency-fund top-up. The bike you've been saving for. FDs are the right answer when "this money has a job in 1–3 years."

Where it bites. As a long-term primary vehicle, it leaves a lot on the table. 5% gross becomes ~4.75% net, and Nepali inflation has historically averaged 4–7% (though it has eased to 2–3% in 2025). Real returns over a multi-decade horizon stay modest. Across 35 years, the gap to equity compounds into something painful.

Honest fit at 25. A liquidity buffer, not a strategy. 15–25% of investable money, laddered across maturities so something is always coming up in the next year or two without you breaking a deposit early.

A starter allocation

No universal answer exists. Here's a plain-vanilla split for a 25-year-old in Kathmandu earning ~रू 50,000–70,000 take-home, with PF/SSF auto-running and an emergency fund already in place. Of the new money you invest each month:

• Mutual fund SIP — 60%. One scheme, one auto-debit, minimal ceremony.
• NEPSE direct — 20%. 2–4 stocks you actively follow, plus IPO applications when liquidity allows.
• Fixed deposit — 20%. A laddered FD for 1–3 year goals or as the buffer above your emergency fund.

If "20% NEPSE direct" sounds stressful, push that slice into the mutual fund and run a 80/0/20 split. The penalty is small. The penalty for not investing because you couldn't decide is huge.

If you're in the 20%+ tax slab and have CIT room left, redirect part of the FD slice into CIT first. The tax shield beats the FD's yield, even before compounding. See the FD vs MF vs CIT post for the full math.

The behavioural part nobody talks about

The investment that compounds at 10% over 35 years isn't the same thing as the investment that advertises a 10% long-term return. The first version requires you to keep buying through 2018, through the 2021–22 drawdown, through whatever comes next, without flinching.

A few rules of thumb that have worked better than any vehicle choice:

1. Set the SIP and don't touch it for 12 months. Including not "topping it up" because last month was green.
2. Don't check NEPSE more than once a week. Once a month is better. The number of decisions you don't make is the number of bad ones you avoid.
3. A drawdown at 25 is a feature, not a bug. Lower NAVs mean your monthly SIP buys more units. You only lose if you stop.
4. Don't over-diversify across schemes. Three SIPs in three "different" equity schemes that all hold NEPSE's banking sector is one bet, in three wrappers, with three sets of fees.
5. Keep your direct equity small enough that a 50% drop doesn't wreck your morale. Whatever that figure is for you, that's your NEPSE sleeve.

Mechanics: how to actually start this Shrawan

If you've read this far with nothing set up, the practical sequence is small enough to wrap up in a weekend:

1. Open a MeroShare account through CDSC if you don't already have one. Most banks act as DPs and the process is now mostly online. This is the prerequisite for IPOs and direct equity.
2. Pick one mutual fund scheme with a long enough track record, at least 3 years live. Check the expense ratio (lower is better) and whether the closed-end discount/premium is reasonable.
3. Set up a SIP via your bank's direct-debit, monthly, payday +1 day. Start with whatever number you can sustain. रू 2,000 is enough to begin the habit.
4. Open a 1-year FD with your primary bank for the FD slice. Roll into a 2-year FD on maturity to start a ladder.
5. For the NEPSE direct slice, start with 1–2 companies you actually understand. Banking and hydropower dominate NEPSE's liquidity, and that's where most retail learning happens.

You'll get the sequence wrong in small ways. That's fine. The goal at 25 isn't to optimise. It's to start the clock.

Tracking it in Kharchapatra

Three accounts, mirroring the three vehicles:

• Mutual Fund — investment account. Log the monthly SIP debit as a transfer from your bank account, not as an expense. Update the balance using current NAV × units once a month.
• NEPSE — investment account. Log buys as transfers, sells as transfers back. Dividends and bonus shares received via MeroShare can go in as income (covered separately in a future post).
• Fixed Deposit — bank account. Log the deposit as a transfer, mark maturity in the description.

The point isn't to recreate Bloomberg. It's to see, on one dashboard, that you actually invested this month, and that net worth is climbing regardless of what face NEPSE is making this quarter.

What you actually need to decide

Three questions, asked once:

1. How much can I sustainably invest each month? Pick a number you can hit twelve months in a row. Half of an aspirational figure beats none of it.
2. How much variance can I sit through without selling? The honest answer here sets your equity-vs-FD split. The spreadsheet doesn't.
3. Will I leave it alone for 5 years before judging it? If yes, a SIP is the boring right answer. If no, you don't actually have a long horizon, so work on the temperament before the asset allocation.

Get those three right and which scheme, which broker, which 1-year vs 2-year FD becomes detail. Get them wrong and no vehicle saves you.

If you're in this exact spot and want help walking through the numbers on your own salary, email parjanya57@gmail.com. I'm collecting cases for a follow-up post on real starter portfolios from real Nepali 25-year-olds, anonymised.