Systematic Transfer Plan (STP)
Systematic Investment Plan (SIP)
An investment strategy where a fixed amount is automatically transferred between mutual funds at regular intervals under the same AMC.
An investment strategy where a fixed amount is transferred at regular intervals to one or several mutual fund houses/AMCs.
Investors opt for STP investments to transfer funds between debt to equity funds to minimise risks from market volatility.
Usually opted for when an investor wants to invest in equity funds in multiple AMCs.
STP investments offer higher returns since you also get returns from your source fund.
Lower returns than STP since you only get interest from your SIP investment(s) and bank account.
Open-ended with no time frame. You can invest as long as you want and withdraw any amount whenever you like.
Has a fixed tenure that you must choose before starting your SIP plan. Must withdraw the full amount.
Every transfer from the debt fund to the equity fund is subjected to short-term capital gains tax*.
Must pay long-term capital gains tax* or short-term capital gains tax*, based on the tenure
Investors with a large corpus who want to invest a lump sum into equity funds during volatile market conditions.
Investors who do not have a large corpus but want to start investing.