Systematic Transfer Plan: If you invest in mutual funds through SIP, then this news is very important for you, as well as beneficial. Today we will learn about the Systematic Transfer Plan (STP), which is an investment strategy. Through the STP, you can transfer your funds from one mutual fund scheme to another scheme at already fixed intervals. This transfer occurs from time to time, which can give you more returns.
Funds can be transferred only in different schemes of a mutual fund company
STP proves to be very beneficial in the falling market, which helps in reducing your loss to a great extent. With the help of STP, you can withdraw money from an equity scheme and transfer it to a date scheme. Similarly, you can withdraw money from the date scheme and put it in the equity scheme. Keep in mind that through STP you can transfer funds to different schemes of one mutual fund company. You cannot transfer funds deposited in one company scheme to another company scheme.
There are 3 types of STPs
STP also has 3 types of options- Flexible STP, fixed STP and capital systematic transfer plans are available. STP has many advantages. When the market is undergoing a decline, you can switch from one scheme to another to limit your loss in such a situation. Apart from this, you can also save tax by transferring funds from equity scheme to ELSS scheme. It helps you manage risk.
Return can increase by reducing risk, loss
With the help of STP, you can not only reduce your risk and loss by transferring your funds from one scheme to another but also increase your returns. With its help, you can transfer funds to stable schemes with high fluctuating schemes.
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