What is stp
I am not able to understand about STP
I got it what is sip & swp.
Is it debt to Equity or equity to debt transfer?
SIP is simple you choose best fund from the list but here where to start & where to transfer and when??
Kindly give me simple example.
3 Answers
Hi,
STP stands for Systematic Transfer Plan.
It can be set up between equity to debt (or) Debt to Equity funds.
Let's say you have lump sum amount of Rs 1.2 Lakh to be invested in Equity funds. But, you do not want to invest in an equity fund at one go.
So, you can set up STP for say 12 months and every month you can transfer Rs 10,000 from a Liquid fund to Equity fund.
Ex : HDFC Liquid fund to HDFC Balanced fund.
Kindly note that when the units are transferred from a Liquid fund, these are treated as normal redemptions and can be subject to taxes on capital gains.
Read:
https://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/
Also, STP can be set up between the funds which belong to same Fund house.
So isn't it kind of SIP? In that we invest monthly from bank saving account to selected fund?
How sip & stp are different from each other?
Also as you said it redems from liquid fund to equity at that time, does exit load is appied on the units which are being transferred?
Thank you
Hi,
STP is a variant of SIP.
SIP : If you do it via SIP, this money will be taken from your account every month and invested in the mutual fund that you have selected for SIP.
STP : STP is essentially transferring investment from one asset or asset type into another asset or asset type.
Both, SIP & STP can be considered as Risk mitigation strategies.
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