What is an STP?
A Systematic Transfer Plan (STP) is a smart way to move your money gradually from one mutual fund to another.. It helps you reduce risk while staying invested. Typically, investors use STP to transfer money from a debt fund (low risk) to an equity fund (higher return potential) in a phased manner.
For example, if you receive a lump sum (like a bonus or retirement benefit or a one time payment or a gift), instead of investing the entire amount in equity markets at once, you can park it in a debt fund and use STP to shift a fixed amount regularly into an equity fund, to address volatility.
Who Can Use an STP?
STP is ideal for:
- Investors with a lump sum amount looking for better returns over time, by averaging the cost per unit
- Consultants, professionals, business owners, or retirees who want to invest in equity safely
- Parents planning to invest the Gift received for Children’s education or long-term wealth creation
Benefits of STP (Systematic Transfer Plan)
Reduces Market Timing Risk
You don’t have to worry about entering the market at the wrong time. STP spreads your investment over time, reducing the impact of market volatility.
Generates Better Returns on Idle Funds
Instead of keeping your money in a savings bank or current account, you earn returns from a debt fund while it is being transferred to an equity fund.
Rupee Cost Averaging
Just like SIP, STP helps buy more units when prices are low and fewer when prices are high, averaging out the cost over time.
Customizable & Flexible
You can choose how much and how often to transfer – monthly, weekly, or even daily.
Smooth Transition from Debt to Equity
Ideal if you want to move funds gradually into equity without taking sudden risks and helps to make the most of your money – steadily and strategically.
When to Use STP?
- Received a bonus, inheritance, or maturity amount? Park it in a liquid or ultra-short-term fund, and use STP to invest steadily in equity.
- Planning for long-term goals like child’s education, home purchase, or wealth creation? STP can help reduce risk while growing your investment.
Mutual Funds
Lumpsum
SIP
SWP
STP
