Systematic Investment Plan (SIP)

 

Systematic Investment Plan (SIP)

Sip is an investment route wherein one can invest a fixed amount at regular intervals– say once a month or once a quarter, instead of making a lump-sum investment. The instalment amount could be as little as INR 500 a month and is like a recurring deposit. It’s convenient as you can give your bank standing instructions to debit the amount every month.

SIP has been gaining popularity among Indian investors, as it helps in investing in a disciplined manner without worrying about market volatility and timing the market. Systematic Investment Plans are easily the best way to enter the world of investments for the long term.

How does a SIP work? 

Through SIPs you can invest in any funds or shares, which help you, create wealth over the long term. Here, generating returns and creating wealth is not the same thing. Investing in fixed deposits only helps you in generating returns. But if you want to create wealth, you can invest in SIP mutual funds. And this amount is automatically deducted from your bank account at the interval at which you choose to invest. 

Let’s suppose, you invest a certain amount in a monthly SIP and have automated your deduction date as 5th of every month. So, this amount will be automatically deducted from your bank account on the 5th of every month to be invested on the selected mutual fund. 

How investing in SIPs helps you create wealth?

In exchange for the money that has been paid to mutual funds, it allots a number of units to you. 

For example, let’s assume that the NAV for a mutual fund is currently Rs 20. Now if you invest Rs 1,000 in that mutual fund, you will be allotted 50 units of the scheme. As the NAV of the mutual fund increases, your investments will also grow accordingly. So, if the next year, the NAV of this fund becomes Rs 30, then the 50 units that you had bought for Rs 1000, would be worth Rs 1,500 after the increase. This is the way your investment grows, helping you to create wealth over the long term. 

As an investor, the next question you might ask is why should I invest in SIP? 

Here are the 3 benefits of investing in SIPs

#Number 1: Rupee cost averaging:

Whenever you invest in a SIP, your cost gets averaged out. As you see, the markets move in cycle. Sometimes it is bearish, then it turns bullish and then again, bearish, and then bullish. This is how the cycle moves. So, if you are investing a fixed amount on a regular basis in a SIP, in the time when the markets are bearish, you will be allotted more units for your investments. Meanwhile when the markets go up, the number of units that will be allotted for your investments will be much lesser. That is, when the markets are down you are buying more units and when the markets are at the peak, you are buying less. This way your cost gets averaged out. Now, when the market cycle changes, for example from bearish to bullish, since your cost has been averaged out, this becomes an opportunity to earn great returns. Eventually, it will help you to create great wealth on your investments. So if you are investing in a SIP, you do not need to think about the ups and downs of the market cycle, as the cost automatically gets averaged out.

Number 2: Power of compounding:

Warren Buffet started investing at the age of 14, but his money started to grow exponentially when he was 50. Power of compounding is often referred to as the eighth wonder of the world. And here, you must be thinking, what this power of compounding means? Under the power of compounding, you not only get returns on the money which has been invested but also on the gains. And this way you can create a great amount of wealth over a period of time. Let’s suppose, in one year, you have invested Rs 1 lakh in a mutual fund. Its one-year return is 15 percent. So, by the end of the year, this amount will be Rs 1 lakh 15 thousand. What power of compounding does is, in the next year (assuming the rate of return if 15 percent), it will provide the return on Rs 1 lakh 15 thousand, instead of your original investment of Rs 1 lakh. So, this way, in the second year, you will be getting a return on money that you have invested, and on the gain from the previous year. By the end of the second year, the amount would be Rs 1 lakh 32 thousand.

Is SIP really create wealth

If you are asking this question, the answer may not be yes always. All the investment are subject to market risk. Moreover, the performance of the mutual funds is based on the effectiveness of the fund manager. We need to accept the reality that most of the Fund manager are not real experts. The performance of many mutual funds and it is performance based on SIP is as under.

Conclusion

If you want to create SIP, you shall be prepared to wait for longer period and watchful about the market. The exit shall be also at the appropriate time so that you will make profit. From the above, none of the mutual fund has outperformed the NIFTY index and failed when there is a free fall in nifty and eroded the capital. This has happened when the Nifty fall heavily in 2020.  Hence, we need to understand the risk in Mutual funds and market securities and invest carefully based on out risk appetites

Source https://bluechipindia.co.in/    NSE - National Stock Exchange of India Ltd. (nseindia.com)

 

Data Security and Identity theft

 

Data Security and Identity theft

When I was kid, my mother used to say whatever, you do it is known to your consciousness and GOD. It is nothing but to caution from doing wrong things and instill a fear in my mind that I am being watched by GOD always. It is believed by many that your past, present, and future can be decoded though astrology.  The above are myth and belief.

Let us come to the reality, are we being watched, or are we being followed, is some decode our secrets, the answer is yes. It may be happening with our knowledge or without our knowledge. Sometimes we are sharing your information without understanding the implication; sometime it is through unfair means by unscrupulous person either though stealing or purchased.

1.       We are being tracked by Google about my movement and it provide me a report covering the distance travelled, places/ cities visited during a specific time frame. This is possible though tracking our mobile phone. We gave all our information.

2.       In our Facebook we are seeing advertisement on the product we have purchased recently or browsed recently on the internet.

3.       If we use credit for bigger purchase, we get call from many other credit card providers for credit cards with big offers. Without our asking, card limit is enhanced.

4.       If we pay a hospital bill or purchase of medicines though electronic payment, we are getting a call for insurance policy

5.       If Our bank balance increased substantially, we are getting call for investment option and if reduced substantially we are getting loan offers

6.       But the bulk of the losses last year, $43 billion, stemmed from identity theft scams where criminals interact directly with consumers to steal their information through methods such as robocalls and phishing emails. Victims of these scams lost $1,100 on average, according to Javelin. 

7.        “Identity fraud has evolved and now reflects the lengths criminals will take to directly target consumers in order to steal their personally identifiable information,” says John Buzzard, a lead fraud and security analyst with Javelin Strategy & Research.

May be the day is not too far when we order a Pizza online, we will be guided by the system, based on our previous order, health conditions, and financial position, and payment options available with us, a pizza which may be plain not spicy, without any cheese over it.

Data Security

Data security refers to the process of protecting data from unauthorized access and data corruption throughout its lifecycle. Data security includes data encryption, hashing, tokenization, and key management practices that protect data across all applications and platforms.

Ø  Cloud data security – Protection platform that allows you to move to the cloud securely while protecting data in cloud applications.

Ø  Data encryption – Data-centric and tokenization security solutions that protect data across enterprise, cloud, mobile and big data environments.

Ø  Hardware security module -- Hardware security module that guards financial data and meets industry security and compliance requirements.

Ø  Key management -- Solution that protects data and enables industry regulation compliance.

Ø  Enterprise Data Protection – Solution that provides an end-to-end data-centric approach to enterprise data protection.

Ø  Payments Security – Solution provides complete point-to-point encryption and tokenization for retail payment transactions, enabling PCI scope reduction.

Ø  Big Data, Hadoop and IofT data protection – Solution that protects sensitive data in the Data Lake – including Hadoop, Teradata, Micro Focus Vertica, and other Big Data platforms.

Ø  Mobile App Security - Protecting sensitive data in native mobile apps while safeguarding the data end-to-end.

Ø  Web Browser Security - Protects sensitive data captured at the browser, from the point the customer enters cardholder or personal data, and keeps it protected through the ecosystem to the trusted host destination.

Ø  eMail Security – Solution that provides end-to-end encryption for email and mobile messaging, keeping Personally Identifiable Information and Personal Health Information secure and private.

In addition to the above, many countries has imposed regulation that all the financial data should be kept in their own countries and even if processing is done outside the country, it shall be transferred and stored in the country within 24 hours.

Self-Protection

Despite all, are we safe or our information are safe and secured, the answer is NO.  The information is wealth and it is being sold by money.  If yes how to protect us in this e-world.

1.       The emails account and mobile phone connected to financial transaction or your online transactions shall distinct one and do not connect it with any social media  Never receive any calls on these phone or answer any emails unless you are sure about the caller. May be ordinary phone will do and if you use a smart phone do not download unnecessary apps into it.

2.       Use a separate email for social media

3.       Never share your personal email address and phone to the public network unless you are sure about the web page.

4.       Never be greedy. In this world nothing is free and no free lunch.

5.       Destroy private records and statements. Tear up – or, if you prefer, shred – credit cards statements, solicitations, and other documents that contain private financial information.

6.       Secure your mail. Empty you mailbox quickly, lock it or get a P.O. box so criminals don’t have a chance to snatch credit card pitches. Never mail outgoing bill payments and checks from home. They can be stolen from your mailbox and the payee’s name erased with solvents. Mail them from the post office or another secure location.

7.       Safeguard your Social Security number. Never carry your card with you, or any other card that may have your number, like a health insurance card. Don’t put your number on your checks. It’s the primary target for identity thieves because it gives them access to your credit report and bank accounts.

8.       Don’t leave a paper trail. Never leave ATM, credit card or gas station receipts behind.

9.       Never let your credit card out of your sight. Worried about credit card skimming? Always keep an eye on your card or, when that’s not possible, pay with cash.

10.   Know who you’re dealing with. Whenever anyone contacts you asking for private identity or financial information, make no response other than to find out who they are, what company they represent and the reason for the call. If you think the request is legitimate, contact the company yourself and confirm what you were told before revealing any of your personal data.

11.   Take your name off marketers’ hit lists. In addition to the national Do-Not-Call registry  you can also cut down on junk mail and opt out of credit card solicitations.

12.   Be more defensive with personal information. Ask salespeople and other if information such as Social Security or driver’s license number is absolutely necessary. Ask anyone who does require your Social Security number about their privacy policy and that you do not want your information given to anyone else.

13.   Monitor your credit report. Obtain and thoroughly review your credit report (check for a free copy at www.Annualcreditreport.com or by calling 877-322-8228) at least once a year to check for suspicious activity. If you find something, alert your card company or the creditor immediately. You may also look into credit protection services, which alerts you any time a change takes place with your credit report.

14.   Review your credit cards statements carefully. Make sure you recognize the merchants, locations and purchases listed before paying the bill. If you don’t need or use department-store or bank-issued credit cards, consider closing the accounts.

Let us be safe and get ourselves protected always.

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Based on Data collected though various webpages