Hi Sreekanth,
I have not much understanding about STP(systematic transfer plan) & SWP (systematic withdrawal plan ) w.r.t mutual fund units. Could you pls explain the difference b/w them, when to do STP & SWP, equity to debt STP should be done or not etc. and how does it benefits?
Regards,
1 Answers
Hi,
STP refers to Systematic Transfer Plan where in an investor invests a lump sum amount in one scheme and regularly transfers (i.e. switches) a pre-defined amount into another scheme of same Fund house.
Ideally, the STPs can be set up from Debt funds to Equity funds. Ex : HDFC Liquid fund to HDFC Balanced fund.
Systematic Withdrawal Plan (SWP) is a service offered by mutual funds which provides investors with a specific amount of payout at a pre-determined time intervals, like monthly, quarterly, half-yearly or annually.
Kindly read this article, have explained why SWP can be a better option than Dividend payout option:
http://www.relakhs.com/best-monthly-income-plans-india-mutual-funds/
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