SIP (systematic withdrawal plans) vs STP (systematic transfer plans)

[anuragmukherjee28]

While everyone knows about SIPs (systematic withdrawal plans), very few investors are aware of STPs (systematic transfer plans). They can make you more money, especially if you have a lump sum of money on hand.

Now the main question is: How does STP work?

Let me explain this to you with the help of an example.
suppose you have a 10 lakh rupee corpus and are lying around in your savings account, which you want to invest in mutual funds.

Now here, you can do mainly 3 things.

1. One-time fixed investment in mutual funds
2. Start an SIP for mutual funds.
3. Start an STP for mutual funds.

1. One-time fixed investment in mutual funds

• If you put your entire investment in mutual funds at once, it might be very risky as it would fluctuate a lot according to market conditions, and this is not suitable for investors with a low risk appetite.

1. Start an SIP for mutual funds

• In this case, a fixed amount of money would be withdrawn from the savings account and invested in the mutual funds of the choice; it was a relatively less risky method, but the leftover amount would be lying around in the bank’s savings account, which offers interest of only 3-4% at max.

Now the third option, or the best of both worlds option

1. Start an STP for mutual funds

• Here, the whole lump sum amount is stored inside a liquid fund or ultra-short-duration fund, which offers an interest rate of around 6-7%, and from there, the money is invested in the mutual funds in the SIP option. By doing this, the risk of the market is minimised, and you also get better interest rates on the remaining amount than what you would get if it were in the savings account, so it's a win-win situation for people with a low-risk appetite.

Conclusion: If you have a lump sum of money, then definitely select STP over SIP.

 

[anisharya16]

How to start stp?

 

[anuragmukherjee28]

How to start stp?

grow has a option to start an STP

 

[anisharya16]

grow has a option to start an STP

Any other options? I invest in mutual funds using Kuvera

 

[anuragmukherjee28]

the procedure to enable STP option in kuvera app -

Any other options? I invest in mutual funds using Kuvera

Login to the Kuvera app. Tap on the cart icon and go to STP. Select "Add STP". Choose the fund from which you want to transfer, the destination fund, the amount, frequency, start date and number of transfers, and press "Confirm".

 

[anisharya16]

the procedure to enable STP option in kuvera app -



Login to the Kuvera app. Tap on the cart icon and go to STP. Select "Add STP". Choose the fund from which you want to transfer, the destination fund, the amount, frequency, start date and number of transfers, and press "Confirm".

Thanks bro.

 

[Vivek Verma]

While everyone knows about SIPs (systematic withdrawal plans), very few investors are aware of STPs (systematic transfer plans). They can make you more money, especially if you have a lump sum of money on hand.

Now the main question is: How does STP work?

Let me explain this to you with the help of an example.
suppose you have a 10 lakh rupee corpus and are lying around in your savings account, which you want to invest in mutual funds.

Now here, you can do mainly 3 things.

1. One-time fixed investment in mutual funds
2. Start an SIP for mutual funds.
3. Start an STP for mutual funds.

1. One-time fixed investment in mutual funds

• If you put your entire investment in mutual funds at once, it might be very risky as it would fluctuate a lot according to market conditions, and this is not suitable for investors with a low risk appetite.

1. Start an SIP for mutual funds

• In this case, a fixed amount of money would be withdrawn from the savings account and invested in the mutual funds of the choice; it was a relatively less risky method, but the leftover amount would be lying around in the bank’s savings account, which offers interest of only 3-4% at max.

Now the third option, or the best of both worlds option

1. Start an STP for mutual funds

• Here, the whole lump sum amount is stored inside a liquid fund or ultra-short-duration fund, which offers an interest rate of around 6-7%, and from there, the money is invested in the mutual funds in the SIP option. By doing this, the risk of the market is minimised, and you also get better interest rates on the remaining amount than what you would get if it were in the savings account, so it's a win-win situation for people with a low-risk appetite.

Conclusion: If you have a lump sum of money, then definitely select STP over SIP.

Sounds cool