Systematic Transfer Plan

How to use STP smartly

Systematic Transfer Plan (STP) is a tool provided by Mutual Funds that help transfer money automatically between two schemes at a predefined frequency.

Different types

Fixed
Transfer amount is fixed

Capital appreciation
Transfer only profit amount

Flexi STP
Transfer variable amount* based on liquidity

*minimum transfer amount can vary from different scheme

Benefits of STP

Fixing liquidity problems

Face liquidity problems but want to invest regularly? Simple, once you get money, invest lumpsum amount in liquid scheme and start STP into an Equity scheme- it works like SIP.

Doing value based investing

Rebalance the portfolio across assets based on market valuation, using STP. When markets look overpriced, start STP from equity scheme to liquid scheme and vice versa.

Managing asset allocation for goal based investing

Investor who are nearing the goal either in terms of amount and / or time can transfer investment from equity to liquid scheme using STP to manage portfolio volatility better.

Planning your tax savings better

Lets say you have liquidity issue and still want to invest in an ELSS, start an STP from an existing investment in equity scheme to an ELSS and save tax.

How it works

Mr. X had invested ₹60,000 in scheme A (Liquid - Debt Scheme). now, he wants to transfer ₹20,000 every month in scheme B (an Equity scheme).

With STP, he can invest in scheme B using his existing investment in scheme A, simple by following a one-time registration process.

₹20,000 Per Month

₹60,000

₹40,000

₹20,000

₹0

₹20,000

₹40,000

₹60,000

Scheme

Month 1

Month 2

Month 3

Month 4

Scheme A

Scheme B

₹60,000

Month 1

₹0

₹40,000

Month 2

₹20,000

Month 3

₹40,000

₹0

Month 4

₹60,000