Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Systematic Transfer Plan automatically moves a fixed amount or units from one mutual fund scheme to another at regular intervals.
STP lets you shift money gradually from one fund to another — commonly from a liquid fund to an equity fund — without timing the market in one shot.
Each STP instalment is a redemption from the source scheme and fresh purchase in the target scheme, triggering tax and exit load implications. Useful for deploying lump sums while maintaining rupee cost averaging discipline.
You park ₹6,00,000 in a liquid fund and STP ₹25,000 monthly into a flexi-cap fund for 24 months, earning liquid returns on undeployed cash while easing into equity.
STP spreads market entry over time, reducing timing risk. Lump-sum may win in rising markets but STP suits investors nervous about immediate deployment.
Yes. Each transfer is treated as redemption from the source fund, potentially attracting capital gains tax depending on holding period and fund type.
Typically STP works within the same AMC. Cross-AMC deployment usually requires manual redemption and purchase or SWP-plus-SIP combination.