Every year, the Ministry of Finance comes up with figures highlighting soaring consumption versus modest saving patterns of the general public. Though just a small pie is left for saving, people still find it challenging to think of saving alternatives apart from the traditional ones of real estate and precious metals, more so in peri-urban and rural contexts. The savings portion of inbound remittance is mostly being used in acquiring another piece of land or adding one more storey. The general belief is that an investment in real estate will provide multiplied returns. At the outset, this might look true. But if one starts to calculate compounding return over the period of real estate holding, the story might look totally different.
Smart ones always look for avenues to diversify their holdings. They try to make their money smarter by making it work more efficiently for them. Starting a business venture could be one of the options, but the inherent risks associated with such ventures are higher compared to putting one’s money into largely true and tested business models of others as a lender or as a passive partner.
Both the options have different scales of risk. The ones who are comfortable with lesser risk would go for the lending option and tools available include term deposits and debentures issued by the financial institutions or the government bonds.
The ones who have slightly higher appetite for risk would go for ownership stake in public business ventures
The ones who have slightly higher appetite for risk would go for ownership stake in public business ventures as a public shareholder. Motivating attributes for this option include ease of entry/exit and multiple sources of return on investment–cash dividend, bonus share or price appreciation of a scrip. If one is more interested in price appreciation, s/he needs to keep a closer tab on market situation for prudent decision-making.
Nepali bourse, ever since making the all-time high of 1,888.36 in July 2016, has been running continuously down. Multi-month downtrend had has pauses in between. In February 2017, after testing the low of 1,218.86, the buyers overcame the sellers till April 2017 and the bourse reached the seasonal high of 1,746.82. Again, the supply exceeded the demand and the market tested the low of 1,134.92 in March 2018 followed by a bounce-back to 1,461.21 in April 2018.
In 2019, the same pattern has continued. The index tested the low of 1,100 on multiple trading days in February. Since March, it showed a sustained growth till it neared 1,350-ish.
The index has been in stalemate for past four weeks (since the fourth week of April). It is moving sideways, unable to break the resistance of 1,350-ish while taking continuous support of 1,280-ish. Compared to past two and half years, market confidence is in positive zone which is reflected in market depth and trading volume each day. Still, the market direction will be guided by whichever way the index will break from the current sideways moment.
