What is Systematic Transfer Plan? Prerna N, 22 Oct 2012

What is Systematic Transfer Plan? How can I benefit from this plan?

Fintotal Answer

The Systematic Transfer Plan (STP) is a facility provided in most mutual fund schemes. This allows you to move fixed amount of money every month or every quarter from one scheme to another with the same mutual fund company. Here’s a practical use for this: say you get a bonus but don’t want to take the risk of putting all this money into equity at once. You can put this money into a debt fund initially, and sign up for an STP to transfer a bit of it every month into an equity fund. Thus, an STP doesn’t affect your bank account at all, and offers you the convenience of having these switches done automatically. The advantage of using Systematic Transfer Plan is that it eliminates the risks associated with timing the market, in case you are interested in investing a lump sum amount.

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