Understanding `Systematic Investment Plan’ (SIP)!

Benjamin Graham, the father of value investing, has termed dollar cost averaging as one of the top 3 tenets of investments for a defensive investor. Dollar cost averaging is nothing but the systematic investment plan.
Systematic investment plan is a scheme which allows investors to invest in a mutual fund a certain amount of money over a period. For example, investors can invest Rs 5000 in a mutual fund every month.

Advantage of SIP
Systematic investment plan has many advantages over one time investment. Some of the advantages are mentioned below.

Price averaging: SIP allows you to average the price over long period so that the impact of changing prices of mutual fund is minimized. You can buy more units when the prices drop and buy less when the prices move up. The advantage is that you do not have to worry about price movement.

Discipline: SIP instills in you a sense of discipline towards investment and savings.

Low base requirement: You can start SIP with a much lower investment. Many banks and financial institutions allow investment via SIP as low as Rs 500 a month.

Example:
Let’s see how SIP works.  The table shows the monthly data of a mutual fund by Birla Sun Life. The fund is Birla Sun Life Small & Midcap Fund – GROWTH. The NAV is highest NAV for the month.

Look at the column total investment and investment at current price. You can clearly see that total investment in the case of SIP is almost always lesser than the investment needed to buy the same accumulated quantity at current price.

This may not be true when the prices keep going down continuously. We know, however, that prices of mutual fund or stock do not go up or down straight. The short term ups and downs usually happen one after the other.

SIP moderates the impact of these short term ups and downs of the mutual fund prices.

How to proceed with SIP:
You can ask your bank to allow a mutual fund of your choice debit a certain amount towards investment every month. You have to specify the amount, date of the month when money will be invested, and duration of SIP. For example, if you choose to invest Rs 3000, 10th of every month, for 3 years, the mutual fund will keep debiting Rs. 3000 from your account towards investment in the fund for 36 months.

You can also follow this on your own by investing Rs. 3000 every month. However you need to be very disciplined with your budget to achieve this.

Variants of SIP:  Daily, Monthly
Daily SIP scheme requires investors to invest daily while monthly SIP allows investors to invest monthly. At first glance, daily SIP seems to take care of volatility better than monthly SIP, but there is no empirical evidence that has shown significant difference in returns.

Key aspects:

1. Daily SIP is not allowed by many mutual funds and hence your options are limited. Monthly SIP options are available in almost all mutual funds.
2. The most important aspect is to do with our habits. We are used to planning for a month. It is more convenient for us to see income, investment, and expenses in a monthly timeframe and hence we can plan better towards a monthly SIP.
3. The final aspect is calculation of taxes. Daily SIP makes tax calculation more complex as you have to evaluate the capital gain by comparing the selling price with everyday price for the last 1 year.

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Mizoram Bodies See Red in Protected Area Permit Relaxation

Aizawl, Jan 28 : Several social organisations in Mizoram have perceived the recent relaxation of protected area permit (PAP) in Mizoram as a threat to the social security of the indigenous people of the state.

In the wake of the lifting of PAP from three Northeast Indian states--Mizoram, Manipur and Nagaland, the Mizo Zirlai Pawl (Mizo students' association) today convened a meeting of all major NGOs and political parties of Mizoram on the issue.

All of the representatives of NGOs and political parties, though restrained from speaking on behalf of the organisations they represented, expressed fear that the lifting of PAP would ultimately lead to the lifting of the Inner Line Permit/Regulation that safeguards the tribals of the Northeast state from assimilation.

In a bid to 'woo foreign tourists', the Centre on December 31 lifted the PAP from these three states to allow foreigners to enter into the states without any restrictions for a period of one year.

The order came after a joint delegation of the Manipuri Association of Canada and Local Support Group submitted a memorandum to the home ministry on December 28.

There had been an attempt to lift the PAP in 1994 which invited strong opposition from all political parties and NGOs in Mizoram.

At this juncture, then Union home minister S B Chavan went on a record saying, ''No innerline restriction would be imposed while restricted/protected area permit requirement for foreigners is lifted, as that would mean welcoming foreigners while keeping out Indians.'' While non-Mizo Indians have to get inner line permit (ILP) foreigners are required to get protected area permit (PAP) to enter into Mizoram.

The ILP, in particular, has drawn much criticism from many Indians as it prevented them from entering the state without getting prior permission.

''While many Indians have been complaining about the requirement of a permit to Mizoram, the relaxation of entry permit for foreigners will certainly result in yet another litigation to do away with the Inner Line Permit/Regulation under the Bengal Eastern Frontier Regulation Act, 1873,'' V L Krosshnehzova said in a keynote address.

All of the speakers, except for one, shared the views of the MZP president and expressed fear that the lifting of PAP would be a threat to the social security of the tribals of the Northeast Indians which has been protected since the British time.

''The ILP's aim is not to harass or prevent entry of non-Mizo Indian nationals per se but to secure the future of the natives by protecting the sanctity of their socio-cultural rights, preventing demographic upheaval leading to invasion of their political bastion by the 'outsiders' which has been the case with Tripura,'' said a senior politician.

The meeting also expressed resentment over the Centre making such a crucial decision (to lift the PAP) following a pressure from just two organisations in Manipur, without consulting the people, or for that matter, any organisations in the two other states concerned.

The Mizo organisations also disagreed with the grounds on which the Centre claimed to have lifted the PAP, that was to 'boost' tourism industry.

''Sikkim has emerged as one of the major tourism hot spots in India. Not only the Protected Area Permit, but also Restricted Area Permit is being enforced in Sikkim. Therefore, the Centre's pretext is meaningless,'' Lalmuanpuia Punte, vice-chairman of North East Students' Organisation, said at the consultation meeting.

Under the Foreigners (Protected Areas) Order, 1958, the PAP is enforced in some parts of Uttaranchal, Himachal Pradesh, Rajasthan, Sikkim and the entire states of Nagaland, Mizoram, Arunachal Pradesh and Manipur. Similarly, the RAP, under Foreigners (Restricted Areas) Order, 1963, is enforced in the entire Andaman and Nicobar Islands. In Sikkim, the RAP covers areas uncovered by the PAP.

Average Mizo Eats 14 kg of Meat a Year in Mizoram

Aizawl, Jan 28 : An average Mizo consumes about 14 kg of meat annually, against the national per capita consumption of meat of 7.5 kg.

According to state's animal husbandry and veterinary department, the per capital consumption of meat in Mizoram is 14 kg which is about Rs 191 crores in terms of monetary value.

Pork, the most favourite meat of Mizos, is priced at Rs 180-Rs 200 per kg in the state capital.

Mizoram consumed pork worth Rs 9563.4 lakhs at the rate of Rs 180/kg during 2009-2010.

According to the department's records, during the month of last December about 54158 animals were slaughtered for consumption in the state which has a population of about nine lakhs. Aizawl topped with 20271 animals slaughtered during that month.

The official records further stated that during the period from March 2009 to February 2010, Mizoram produced 1,02,35,000 kgs of different meats which was far from meeting the state's consumption.

The state also produced 371 lakhs of eggs and 10.633 metric tonnes of milk, which again are far from meeting the requirement.

Number of Malarial Deaths Decrease in Mizoram

Aizawl, Jan 28 : Mizoram has witnessed a fall in the number of malaria-related deaths in 2010 with only 31 people succumbing to the killer disease, as compared to the counts - 199 in 2009 and 99 in 2008.

According to the record of State Vector-Borne Diseases Control Programme (SVBDCP) of the 322929 blood samples tested during last year 15,130 were found to be positive with malaria, of which 14,189 were malaria pf, more deadly than malaria pv. As many as 15,099 malaria patients were cured.

As many as 9399 people were tested positive for malaria, of which 7387 were malaria pf, during the year 2009. Of these 119 people died, the record said.

In 2008, 7361 people were found to be positive of malaria, including 6172 malaria pf, of which 91 died, the record said.

Among the eight districts of Mizoram, Lunglei district in southern Mizoram topped with 11 malarial deaths in 2010 and Champhai district bordering Myanmar did not have any death due to malaria, the record said.

According to the death investigation report of the health department, most of the malarial deaths happened due to negligence on the parts of the patients that led to delayed treatment.

''In 2009, the malaria patients were on an average four days late when they took treatment. In 2010, they were on an average two days late. There was a sign of improvement due to extensive health awareness campaign through the media,'' officials said.

The health department has set up FTD/ASHA in all towns and villages to help malaria patients get treatment on time.

Over 50,000 Constables to be Recruited From Northeast in 2011

Guwahati, Jan 28 : Over 50,000 constables will be recruited from North East for various para-military forces this year.

Informing this at a press conference here today, Staff Selection Commission (SSC) chairman NK Raghupathy said, ''The SSC will be recruiting 53,200 constables from the region for six para-military forces on behalf of the Ministry of Home Affairs.'' The vacancies include 880 in the Assam Rifles, 3320 in the Indo-Tibetan Police Force (ITBP) and the rest in four others forces-- CRPF, Sashastra Seema Bal (SSB), CISF and BSF.

Mr Raghupathy said the advertisements will be published on February four and the entire process will be concluded by July 31, 2011, for Assam Rifles and ITBP recruitment, and by October 31, 2011, for the other four forces.

''We are going for a time-bound recruitment and the SSC shall give their commitment to conclude it within the stipulated date in the advertisements itself,'' he added.

Among the vacancies, the highest number of 3206 posts of constables will be recruited from Assam, followed by 449 from Tripura, 329 from Mizoram, 316 from Meghalaya, 229 from Nagaland, 217 from Manipur and 100 from Aruncahal Pradesh.

Asking the unemployed youth of the region to apply in large numbers, the SSC chairman said eligible candidates from the region could be considered for appointment in other states which do not have adequate number of eligible candidates.

''The minimum educational qualification required is matriculation, which should make most youths eligible to apply. Other standard norms of reservation and concessions are applicable,'' Mr Raghupathy added.

He said the SSC expected 32-40 lakh applications for over 50,000 posts.

In Mizoram’s Rice Bowl, Oil’s Well

By Samudra Gupta Kashyap

Mamit district, known as the rice-bowl of Mizoram, has its eyes set on oil palm to provide a new crop to its farmers and at the same time contribute to the state’s agro-based economy.

While the state agriculture department introduced oil palm cultivation in 2001, Mamit rather woke up a little late. But since 2007, nearly 4,500 farmers in 45 villages in the district have taken up oil palm cultivation.

“We introduced nearly one lakh oil palm seedlings in 2007, but about 45 per cent of them were lost in a massive rodent attack in Mautam —Mizoram’s typical famine that returns every 48 years — last few years,” said Zahrila Hrahsel, the district agriculture officer here.

The Mizoram government has, in the meantime, signed MoUs with three leading oil palm companies of the country, and the partner companies have been allotted different districts for oil palm development.

Accordingly, Mamit, which has been identified as the lead district for oil palm cultivation in Mizoram, has been assigned to Godrej Oil Palm Ltd, which has already set up a nursery at Bawngva. Godrej also has been allotted the adjoining district of Kolasib, while another leading company, Ruchi Soya Industries Limited, has been allotted Lunglei district. Some areas in Aizawl, Serchhip and Saiha districts on the other hand have been given to Food, Fats & Fertilizer Limited.

A centrally sponsored scheme on 75:25 sharing between central and the state governments, the oil palm development programme intends to cover approximately 62,000 hectares in Mizoram. Mamit has an area of 3026 sq kms, and a population of over 63,000 people.

“We have sent several batches of our farmers on educational tours to Kerala and Goa to see how farmers in those states are cultivating oil palm and already enhancing their income,” Hrahsel informed.

Altogether 1,000 farmers have already taken up these tours. This apart, the state agriculture department has also organised training programmes for farmers in collaboration with Godrej Oil Palm Ltd and the other two companies, he added.

Farmers who have taken to oil palm cultivation have also formed growers’ societies jointly with the promoting company and the state government.

The advantage Mizoram has over Kerala, Andhra Pradesh, Goa and other states growing oil palm is that the soil here has high moisture content. “Farmers in the southern states are required to provide irrigation support for the oil palms to thrive. But in Mizoram there is no need for irrigation,” the district agriculture officer said.

As for the marketing of the oil palm seeds, Godrej and the other two companies have already agreed to buy back all the produce. The present market value of oil palm seeds is Rs 350 per kg, which is likely to go up by the time the plantations in Mizoram are old enough to produce good amount of fruits.

“Oil palm harvest is generally conducted three to four times a year with each tree yielding 30-40 kgs of fruits per harvest,” Hrahsel said.

What is more interesting is that Godrej has also agreed to buy the old trees after the yield begins to decrease. Oil palm trunks are used for manufacture of particle boards used in furniture.

While the oil palm cultivation programme in Mizoram was so long on a 75:25 sharing between the Centre and the state, the latter has also included oil palm cultivation in its recemt New Land Use Policy (NLUP). Under the policy, every farmer who is involved in oil palm cultivation will get a financial aid up to Rs 1.20 lakh spread over a period of two years.