KNOWLEDGE CENTRE

STP and SWP made simple

STP

Systematic Transfer Plan or STP is a facility offered by mutual funds whereby an investor can transfer a certain amount from one fund to another at pre-determined amounts and intervals.


When should you opt for this facility?
Let’s assume you have just received a gift of Rs. 10 lakhs from a relative and you would like to invest this in equity. However since markets are volatile you are reluctant to invest the entire amount now. Hence you invest this sum in a liquid/short term fund and then systematically transfer smaller amounts to an equity fund over a period of time.


This facility is ideal for investors who are reviewing their portfolio and considering systematic asset allocation. By investing a lumpsum in debt funds you are protecting your capital and by investing it in equity you are growing your capital.

SWP


Systematic Withdrawal Plan or SWP is a facility offered by mutual funds whereby an investor can withdraw a fixed sum from their mutual fund at regular intervals. Investors can use this to redeem their mutual fund in small portions to meet short-term needs or for regular monthly income.

When should you opt for this facility?
Investors who receive a retirement bonus or a huge lumpsum can invest it in a mutual fund and then opt for this facility in order to meet their monthly expenses. This brings discipline to spending as well as helps you grow your capital.

Mutual Fund investments are subject to market risks, please read all scheme related documents carefully.