Systematic Transfer Plan(STP)
A facility to periodically transfer investments from one mutual fund scheme to another.
Systematic Transfer Plan(STP)
What is STP?
A simple investment option that allows you to periodically move your investments from one mutual fund scheme to another mutual fund scheme in a systematic manner.
How does STP work?
If you have a lumpsum amount but don’t want to invest it all at once in an equity scheme, this is for you
- you invest the lumpsum amount in a debt scheme of your choice.
- Then you choose an equity scheme and opt for an STP facility that periodically transfers a certain amount from the debt scheme to the equity scheme.
- You can choose to do this transfer fortnightly, monthly, and even quarterly
This way, your lumpsum money is not taking a lot of equity risk and gets regularly invested in the equity markets.
Why is STP good for you?
- Your money is not sitting idle while you wait for the best time to invest in the equity markets
- Your money earns returns and is invested in the relative safety of debt instruments
- You don’t need to time the markets and can systematically invest in equities
- You benefit from compounding and rupee-cost averaging
New to Investing!
Start your Investing Journey with Edelweiss Mutual Fund
If you have received lumpsum amount as a bonus and are keen on investing in equity but at a same time afraid of its potential risk then Systematic Transfer Plan(STP) is an ideal investment option for you. It allows you to transfer fixed amount periodically from one fund to other fund. In most of the cases it is transferred from low risk debt fund to high risk equity fund. Usually in most of the STP cases lumpsum amount is saved in liquid fund and is periodically transferred to high risk Equity fund like Large cap Fund. You can select STP(Systematic Transfer Plan) frequency like daily, weekly, Fortnightly, monthly and Quarterly This helps in spreading the risk of investing in equity mutual funds in a staggered manner. It gives you dual benefit of growth of equity and safety of debt funds.
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De-jargonising SIP, STP & SWP
When you start your investment journey with mutual funds you are already aware of the many benefits that mutual funds offer ranging from diversification and liquidity to access to expert fund managers. As a result, you only end up paying attention to the choice of investment and do not focus on the way you invest.
Are SIPs and Mutual Funds the Same?
When you google ‘SIP investments’, ‘what is SIP’, what is a Systematic Investment Plan, etc., you will find a lot of textbook definitions. But today let’s understand SIPs with the help of an example. Suppose, you are given a task to fill 1200 litres of water in a tank in two hours. You have two options – you can either start a tap that will automatically pour 100 litres of water in the tank after every 10 minutes. Or, you can simply choose to lift the water at once and pour it. What seems easier? You would say, of course, the first one because you just have to open the tap once without any hassle. Whereas, in the second case, you will be physically burdened. Moreover, you will need help too.
Steps To Choose Best Mutual Funds For SIP Investment
Over the years, mutual funds have become one of the most popular forms of investment owing to its flexibility, convenience and the plethora of choices available. The numerous options also bring with it the complexity of choosing the right mutual fund schemes
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Calculate returns on transferring the amount from one mutual fund to another
Frequently Asked Questions
It allows you to automate your investments periodically from low-risk debt scheme to high risk equity scheme
It gives you growth of equity and safety of debt investments.
It gives you the benefit of rupee cost averaging and compounding.
The minimum amount in the target equity scheme depends on the minimum investment amount allowed in that particular scheme for example. For example in case of Edelweiss Large and Mid cap fund, minimum investment amount is Rs 5000.
In STP, you can choose to transfer fixed amount from debt scheme to equity scheme daily, weekly, fortnightly, monthly and quarterly.
Start your STP or modify/cancel your existing STP with the below process-
Offline Process
- Download the request form (editable) STP Facility and cancellation form from here
- Fill in the form with supporting documents, if any
- Submit the duly filled in form to any of our or Kfintech's branches
Online Process
coming soon
Expected Turnaround Time
- Registration: T+5 days after receiving the duly filled in form at any of our or Kfintech’s branches.
- Cancelation: 10 business days form the date of receiving the duly filled in form at any of our or Kfintech’s branches.
Every periodic transfer from one fund to another fund in STP is considered as redemption and new investment. For example if you have invested in Liquid fund and the target fund is any equity fund then the money transferred from debt fund within first three years is subject to short-term capital gains tax (STCG).
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
