A Systematic Transfer Plan (STP) is an investment strategy that allows you to gradually transfer money from one mutual fund scheme to another at regular intervals. Typically, funds are transferred from a low-risk fund (like a debt or liquid fund) to a higher-risk fund (like an equity fund) in a planned and systematic manner.
STP helps investors avoid the risk of investing a large lump sum in volatile markets at one time. By spreading investments over time, it offers the benefit of rupee cost averaging and reduces market timing risk.
STP is ideal for investors who have a lump sum amount but want to enter the equity market in a disciplined and controlled way. It is commonly used for long-term wealth creation, market volatility management, and balanced portfolio planning.
Key Benefits of STP
- Reduces market timing risk
- Disciplined and automated fund transfer
- Better utilization of lump sum investments
- Rupee cost averaging benefit
- Flexible transfer amount and frequency
In simple words, STP helps you move your money smartly from safer funds to growth-oriented funds over time.
