Starting NEPSE with Rs 40,000: the fixed costs that eat a small portfolio

A cousin opened his Demat account in Asoj, loaded Rs 40,000 into his broker account, and did what the Telegram group told him: bought ten kitta each of nine different companies to "diversify." A month later NEPSE was up and his portfolio was flat. He sent the TMS screenshots over. Nothing had gone wrong with the shares. Nine buys at Rs 4,000 to Rs 5,000 each had cost him Rs 25 in DP charges per company plus commission, and the same again would be due on the way out. Diversification had eaten his first month's gain before it arrived.

Rs 40,000 is a perfectly good starting sum. It is also exactly the size where the flat charges in Nepal's share market stop being rounding errors. The percentages are identical for everyone; the fixed rupees are what decide whether a small portfolio earns anything in year one.

Two kinds of cost, and only one of them scales

Every charge on NEPSE is either a percentage of the trade or a flat rupee amount. The percentages are published by SEBON and are the same for a Rs 5,000 trade and a Rs 5 crore trade. The flat amounts are the problem for small money, because Rs 25 on Rs 4,000 is a very different thing from Rs 25 on Rs 4 lakh.

The commission slab comes from SEBON's May 2024 revision of Schedule 14 of the broker regulations, and broker rate cards such as SS Securities and Naasa show the same 0.36% bottom tier and the Rs 10 floor. The DP side is on the DP's own tariff: Rs 50 to open, Rs 100 a year, Rs 25 per transaction, Rs 50 for Mero Share. Opening fees vary by DP; Siddhartha Capital has quoted Rs 150, and some bank DPs charge Rs 200. The full anatomy of a trade, including who gets which slice of the commission, is in what it costs to buy and sell shares on NEPSE; this post is only about what those numbers do to Rs 40,000.

One thing that changed in 2026: the Rs 150 a year is no longer optional in practice. CDSC told every DP to suspend Mero Share on accounts with unpaid annual fees from the night of 1 August 2026. An account that lapses cannot apply for IPOs or see its holdings until the fee is cleared. Budget for it the way you budget for a bank's annual card fee.

The Rs 25 that decides everything

Run the same Rs 40,000 through the market in different shapes. Each row buys and later sells the whole portfolio once, with the 0.36% commission, the 0.015% fee, and Rs 25 per company per side.

The percentage part, Rs 150 per side, is the same on every row. All the difference is Rs 25 multiplied by the number of companies, twice. Sixteen companies at Rs 2,500 each also trip the Rs 10 commission floor, since 0.36% of Rs 2,500 is only Rs 9, so the floor kicks in and adds a little more.

Put the annual Rs 150 on top. A four-company portfolio that is bought in Kartik and sold the following Kartik has paid Rs 500 in trading costs and Rs 150 in holding costs, Rs 650, or 1.6% of the starting sum, before tax and before the shares have done anything. NEPSE's own 52-week range on 28 October 2026 was 2,469 to 2,970, so a 1.6% drag is not fatal in a year the index moves 20%. In a flat year it is the whole return.

This is the arithmetic behind the odd-lot problem too. The leftover 1 to 9 shares after a bonus credit cost the same Rs 25 to sell as a block of 500, which is why getting rid of odd lots needs its own thinking rather than a reflexive sell order.

What Rs 40,000 actually buys

The board lot on NEPSE is 10 units for a Rs 100 face-value share, under the Securities Trading Regulations 2075; anything smaller is an odd lot, and since Shrawan 2082 odd-lot orders show in NEPSE's market depth but still trade separately. So the smallest sensible order is 10 kitta, and what that costs depends entirely on the price.

Prices from the last two weeks of Kartik 2083 give a feel for the range:

Closes from ShareSansar's 28 October report and the 15 October closing summary; these are illustrations of price bands, not picks. Two things fall out. A Rs 250 scrip bought ten at a time is the worst possible shape, Rs 2,500 per order with Rs 35 of charges on it, 1.4% one way. And a Rs 2,500 scrip is a single-lot decision: 10 kitta is most of the portfolio, so one company's result is your result. Neither is wrong. Both should be chosen on purpose.

If this is the first buy, the TMS step-by-step covers the four accounts and the ConnectIPS load. One rule that matters for small accounts: brokers must hold at least 25% of a buy order's value as advance before executing it, a rule SEBON enforced by suspending a broker in April 2026 for ignoring it. Load the broker account before you place the order, not after.

Capital gains tax is small now, and it only touches profit

The tax on the way out moved twice this year. The FY 2083/84 budget in May raised the rates to 10% short-term and 7.5% long-term. Then on 22 September 2026 the Cabinet, using section 18(1) of the Economic Act 2083, cut them to 5% for shares held 365 days or less and 3.75% for shares held longer, effective the same day and published in the Gazette.

What this means for Rs 40,000: a 15% gain, Rs 6,000, held over a year, owes Rs 225. Held eleven months, Rs 300. Compared with the Rs 500 to Rs 800 in trading costs, tax is the smaller line, and unlike the DP charge it only appears when there is a gain. CDSC deducts it at settlement, so the money that lands in the bank is already net. The weighted-average-cost calculation that decides what counts as "gain" is in the capital gains post.

Dividends are taxed separately: 5% withheld at source under section 88 of the Income Tax Act, on cash and on bonus shares alike, which is why companies often declare a sliver of cash alongside a bonus, as Nepal Re did with 4.75% bonus plus 0.25% cash, to cover the tax on the bonus. On a Rs 40,000 portfolio yielding 5%, that is Rs 100 of tax on Rs 2,000 of dividend. No charge on the bank credit itself turned up in any DP or bank tariff.

Where IPOs fit for a Rs 40,000 investor

The primary market is the cheap door. The SEBON minimum application is 10 units, Rs 1,000 at par, and the C-ASBA service charge is capped at Rs 5 per application, with Nepal Bank waiving it outright and others, such as Garima Bikas Bank, absorbing the CDSC fee themselves. No broker commission, no DP charge on allotment.

The limit is probability, not cost. In the Sopan Pharmaceuticals IPO allotted in April 2026, 27,30,987 valid applicants competed for 34,74,900 public units and 3,47,490 got 10 each, about 12.7% of applicants, one in eight. Apply to eight IPOs with Rs 1,000 each and the expectation is roughly one allotment of Rs 1,000 worth of shares. That is a fine habit and a terrible plan for deploying Rs 40,000. How the allotment lottery actually works and why hydropower issues oversubscribe cover the odds in more detail. Keep Rs 2,000 to Rs 5,000 of the Rs 40,000 free for IPO blocks; put the rest to work on the secondary market.

The SIP alternative, costed the same way

If the fixed costs look like more friction than the learning is worth, the open-end mutual funds launched through 2082 are built for exactly this sum. Nabil Invest's NI 31 takes a Rs 1,000 minimum SIP, monthly or less often, and its fee schedule has no entry charge, a Rs 5 transfer fee per transaction, and an exit load of 1.5% inside a year, 0.75% in the second year, nil after two. Siddhartha's SIP scheme cut its exit load to the first year only in late 2024. SEBON approved 13 new schemes in the first five months of FY 2082/83, most of them SIP-style open-end funds.

The line that is not a rupee figure is the one that matters. The fund's annual management fee comes off the NAV whether the year was good or bad; the exact percentage is on each scheme's factsheet, and reading a Nepali mutual fund factsheet shows where to find it. Direct NEPSE holders pay no such fee, which is the real trade: Rs 650 of fixed friction and the work of choosing, against a percentage-of-everything fee and no work. The comparison at the Rs 25,000-salary level is worked through in NEPSE vs SIP vs FD at 25 in Kathmandu, and how to start a SIP has the mechanics.

Settlement, and the mistake that costs 20%

NEPSE settles on T+2. The seller's side has teeth: a seller who cannot deliver by T+2 goes to close-out and pays 20% of the trade value to the buyer, a quarter of which goes to the state as windfall tax. In FY 2025/26 that was 20,280 close-out cases and Rs 9.95 crore in penalties, mostly from people selling shares that had not yet reached their Demat. For a new investor the rule is simple: sell only what Mero Share shows as settled, never what the TMS says you bought two days ago. On Rs 10,000 that mistake costs Rs 2,000, more than two years of every fixed charge in this post combined.

What you actually need to know

• Fixed rupees, not percentages, are what a Rs 40,000 portfolio has to beat. Rs 150 a year to hold, Rs 25 per company per side to trade. Two to four companies keeps the round trip near 1%; ten companies doubles it.
• Buy in lots that make the Rs 25 small. Rs 10,000 per company is the practical floor at this size. Keep Rs 2,000 to Rs 5,000 free to block in IPOs, where entry is nearly free and the lottery is one in eight.
• Tax is the smallest line now. 5% short, 3.75% long, on gain only, since 22 September 2026. Do not let it drive when you sell; let the DP charge and your own thesis do that.

If you are sizing a first portfolio and want a second pair of eyes on the cost math, email [email protected] with the amount and the number of companies you are considering.

This post is part of the Nepal Money Basics guide — the investing section.