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Common Mistakes Nepali Investors Make – And How to Avoid Them

Thousands of Nepali investors enter the stock market every year, but many fall into avoidable traps. This guide highlights the most common investment mistakes in Nepal and offers practical strategies to avoid them.

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Nepalytix
Common Mistakes Nepali Investors Make – And How to Avoid Them

Introduction

With the rapid rise of retail investing in Nepal — fueled by mobile apps, IPO excitement, and a growing awareness of financial markets — more and more people are entering the NEPSE (Nepal Stock Exchange). While this democratization of investing is a positive trend, it also brings a common set of mistakes that many new and even experienced investors fall prey to.

Avoiding these mistakes can mean the difference between long-term gains and short-term regret.

In this guide, we’ll explore:

  • The most common errors Nepali investors make

  • Why these mistakes happen

  • How to avoid them with practical, actionable advice

1. Investing Without Any Research

Many investors jump into the stock market because of hype — a friend's suggestion, a viral Facebook group, or a “hot tip.” They apply for IPOs blindly or buy shares because the price is rising.

❌ Why It’s a Mistake:

  • You risk buying overpriced stocks with weak fundamentals

  • You may end up stuck with non-performing shares for years

✅ How to Avoid:

  • Read the IPO prospectus before applying

  • Use platforms like MeroLagani, ShareSansar, and NEPSE Alpha to check fundamentals like EPS, P/E, book value

  • Follow company news and financial reports

2. Overexposure to IPOs

The excitement around IPOs in Nepal is huge. Oversubscription by 100+ times is common, and listing gains can be tempting. But many investors put too much of their capital into IPOs only.

❌ Why It’s a Mistake:

  • Most IPOs only allot a few shares (e.g., 10–20 units)

  • Idle funds remain locked up for weeks

  • Not all IPOs guarantee post-listing profit

✅ How to Avoid:

  • Apply selectively to IPOs with strong project backing or cash flow

  • Diversify capital into secondary market opportunities

  • Track IPO allotment trends using CDSC IPO Result Portal

3. Ignoring Portfolio Diversification

Many investors load up on one sector — usually hydropower or banking — or a single stock that’s trending.

❌ Why It’s a Mistake:

  • Sector-specific issues (e.g., NEA payment delays in hydropower) can crash your portfolio

  • Over-reliance on one stock increases risk

✅ How to Avoid:

  • Invest across multiple sectors: hydropower, banking, life insurance, manufacturing

  • Include both growth and dividend-paying stocks

  • Use MeroShare or MeroLagani to track diversification

4. Chasing Quick Profits

The desire to “make quick money” drives impulsive decisions:

  • Buying because of sudden price spikes

  • Selling immediately after minor losses

  • Jumping between stocks too often

❌ Why It’s a Mistake:

  • Increases brokerage fees and taxes

  • Disrupts compounding of returns

  • Often leads to buying high and selling low

✅ How to Avoid:

  • Set a clear investment goal and time horizon

  • Consider holding fundamentally strong stocks for mid to long-term

  • Avoid emotional trading decisions — use data

5. Not Using Digital Tools Effectively

Many investors don’t take advantage of the powerful tools available to them like:

  • NEPSE TMS (for online trading)

  • MeroShare (for IPO, portfolio, and EDIS)

  • Portfolio trackers (like MeroLagani)

❌ Why It’s a Mistake:

  • Missed IPO applications

  • Delayed trade settlements

  • Poor visibility of gains/losses

✅ How to Avoid:

  • Learn how to use all features of MeroShare (especially EDIS)

  • Watch tutorials on using TMS effectively

  • Track your trades with automated tools

6. Ignoring EDIS and Settlement Deadlines

After selling shares via TMS, investors must confirm the delivery via EDIS in MeroShare. Many forget this step.

❌ Why It’s a Mistake:

  • Trade can get canceled if EDIS isn’t done within deadline

  • You may face penalties or blocked accounts

✅ How to Avoid:

  • Do EDIS immediately after trade confirmation

  • Set calendar reminders for T+1 settlement deadlines

7. Blindly Following Social Media Advice

Investment suggestions on YouTube, Facebook, Telegram, or TikTok are everywhere. While some may be well-intentioned, most lack research and may mislead.

❌ Why It’s a Mistake:

  • No accountability or data support

  • Risk of pump-and-dump schemes

✅ How to Avoid:

  • Use social media for awareness, not decisions

  • Cross-verify tips with data on MeroLagani, ShareSansar

  • Follow licensed financial analysts and verified sources

8. Forgetting to Monitor Investments

Many investors buy stocks and forget about them. Without regular reviews, you could miss:

  • Dividend declarations

  • Bonus share announcements

  • Sudden price drops

❌ Why It’s a Mistake:

  • Missed opportunities to sell or rebalance

  • Lose out on benefits like rights shares

✅ How to Avoid:

  • Review your portfolio monthly or quarterly

  • Set up alerts on apps like ShareSansar or MeroLagani

  • Subscribe to official updates from NEPSE or CDSC

9. Misunderstanding Dividend Types

Some investors confuse cash dividends and bonus shares, leading to misjudgment in expected returns.

❌ Why It’s a Mistake:

  • You may expect cash but receive only bonus shares

  • Bonus shares reduce per-share value temporarily

✅ How to Avoid:

  • Read AGM notices carefully

  • Understand dividend yield vs dividend payout

  • Use online dividend calculators to see real return

10. No Exit Strategy

Many Nepali investors don’t plan when to sell. They either:

  • Hold forever hoping prices rise

  • Panic-sell during temporary dips

❌ Why It’s a Mistake:

  • You may miss peak selling opportunities

  • Or sell undervalued stocks too early

✅ How to Avoid:

  • Set target prices and stop-loss levels

  • Reassess goals every 6–12 months

  • Don’t marry your stock — if fundamentals change, it’s okay to exit

Bonus Tips for Safe & Smart Investing in Nepal

  • 📚 Keep Learning: Attend webinars, read blogs, and follow official updates from SEBON, NEPSE, NRB.

  • 💡 Stay Updated: Use Google Alerts for stocks or subscribe to MeroLagani/ShareSansar newsletters.

  • 📱 Use Tech: Master platforms like MeroShare, NEPSE TMS, CDSC, and mobile apps.

Conclusion

The stock market can build wealth, but only for those who avoid emotional decisions and follow informed strategies. In Nepal, common investing mistakes stem from lack of knowledge, overconfidence, or poor planning — but they are entirely avoidable.

By staying informed, using digital tools, and following a disciplined approach, you can grow your capital while avoiding costly errors that trap so many new investors.

Invest wisely, stay patient, and learn continuously — that’s the true formula for success in NEPSE.