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Most Common Mistakes New Investors Make in NEPSE (And How to Avoid Them in 2025)

New to NEPSE? Many first-time investors fall into avoidable traps that cost them time and money. This blog outlines the most common mistakes beginners make in Nepal’s stock market—and how you can invest smarter from day one.

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Nepalytix
Most Common Mistakes New Investors Make in NEPSE (And How to Avoid Them in 2025)

Introduction

Investing in the Nepal Stock Exchange (NEPSE) has become increasingly popular, especially among young professionals and new investors. With easy access to digital tools like MeroShare, TMS, and IPO platforms, the entry barrier has never been lower.

But as simple as it is to begin, investing without a strategy can quickly lead to losses. Many first-time investors fall prey to hype, lack of planning, and emotional decisions.

This blog reveals the top mistakes new NEPSE investors make in 2025—and more importantly, how you can avoid them and build a smarter, more successful investing journey.

1. Investing Without Research

❌ The Mistake:

Many beginners invest in stocks because their friends or social media influencers recommend them—without understanding the company, its business model, or financials.

🔍 Why It's Risky:

  • You may invest in overvalued or non-operational companies.

  • A company with flashy news might have weak fundamentals.

✅ How to Avoid:

  • Use platforms like Nepalytix to review EPS, P/E ratio, NAV, dividend history.

  • Read the prospectus before applying for an IPO.

  • Only invest in companies whose operations you understand.

2. Chasing Hype or Rumors

❌ The Mistake:

Jumping into stocks that are “trending” or have hit multiple upper circuits—without evaluating their real value.

🔍 Why It's Risky:

  • Hype-driven stocks often crash just as fast as they rise.

  • Pump-and-dump schemes are common, especially in thinly traded hydropower or microfinance stocks.

✅ How to Avoid:

  • Don’t base your investment decisions on Facebook groups or Telegram channels.

  • Ask: What is driving this price? Is there any official news?

3. Ignoring Diversification

❌ The Mistake:

Putting all your money into one sector (e.g., only hydropower or microfinance stocks).

🔍 Why It's Risky:

  • If that sector crashes or underperforms, your entire portfolio suffers.

  • Sectors behave differently under various economic conditions.

✅ How to Avoid:

  • Diversify across sectors: banking, insurance, hydropower, manufacturing, mutual funds.

  • Hold at least 4–6 different stocks in your portfolio.

4. Lack of a Clear Investment Goal

❌ The Mistake:

Investing randomly without knowing your time horizon or financial goal.

🔍 Why It's Risky:

  • You may panic during short-term dips.

  • You might sell too early or hold too long.

✅ How to Avoid:

  • Ask yourself: Am I investing for 1 year, 5 years, or retirement?

  • Create separate portfolios for short-term and long-term goals.

5. Overtrading and Daily Speculation

❌ The Mistake:

Trying to buy and sell stocks daily based on price movement.

🔍 Why It's Risky:

  • High fees and commissions eat into your gains.

  • Frequent trading is emotionally draining and risky without experience.

✅ How to Avoid:

  • Stick to long-term investing unless you have a defined strategy.

  • Use TMS for monitoring, but don’t react to every price move.

6. Applying for Every IPO Without Evaluation

❌ The Mistake:

Blindly applying for every IPO that opens—thinking all IPOs are guaranteed profits.

🔍 Why It's Risky:

  • Some IPOs list below their issue price.

  • Many pre-operational companies take years to generate profit.

✅ How to Avoid:

  • Evaluate IPO companies: Look for upcoming revenues, project status, and promoter background.

  • Prioritize IPOs with strong fundamentals and realistic business models.

7. No Risk Management Strategy

❌ The Mistake:

Investing your entire savings or emergency fund in NEPSE.

🔍 Why It's Risky:

  • Stock markets are volatile. You might need funds during a market crash.

✅ How to Avoid:

  • Keep at least 3–6 months of expenses in fixed deposits or savings accounts.

  • Only invest what you can afford to hold for 1–3 years.

8. Not Tracking Your Portfolio

❌ The Mistake:

Buying stocks and forgetting about them. Many new investors never check performance after buying.

🔍 Why It's Risky:

  • You may miss warning signs like profit declines or regulatory issues.

  • You might overlook rebalancing opportunities.

✅ How to Avoid:

  • Use tools like Nepalytix or NEPSE Portfolio Tracker to review gains/losses.

  • Track your portfolio monthly and rebalance yearly.

9. Lack of Patience

❌ The Mistake:

Expecting quick returns and selling at the first sign of correction.

🔍 Why It's Risky:

  • You may miss long-term compounding growth.

  • Emotional selling often results in regret.

✅ How to Avoid:

  • Think long-term: Invest for 3–5+ years for compounding gains.

  • Ignore short-term noise unless something fundamentally changes.

10. Not Learning from Mistakes

❌ The Mistake:

Repeating poor strategies without analyzing what went wrong.

🔍 Why It's Risky:

  • You stagnate and keep making the same costly errors.

✅ How to Avoid:

  • Keep a trading journal: record why you bought/sold and what the outcome was.

  • Reflect on both your gains and losses.