What is an STP (Systematic Transfer Plan)?

An STP (Systematic Transfer Plan) moves a fixed amount from one mutual fund to another at regular intervals — most commonly from a low-risk liquid/debt fund into an equity fund.

The main use: deploying a lumpsum safely

Got a big amount but nervous about investing it all at a market high? Park it in a liquid fund and set up an STP to move, say, 1/12th into equity each month. You earn modest returns on the parked money while averaging into equities — effectively a SIP funded by your lumpsum.

STP vs SIP vs SWP

• SIP — invest fresh money regularly.
• STP — move money between funds regularly.
• SWP — withdraw money regularly.

Note: each STP transfer is a redemption from the source fund, so it may attract exit load and capital-gains tax — usually minor for liquid funds.

→ Plan the equity side with the SIP calculator.