April 16, 2012 5:43 pm
I am investing in mutual fund through SIP.Recently I found in a news paper that STP is more beneficial than SIP. Is it correct?what is STP? Manishji please guide me in this regard.
Thanks for your valuable answers.
I would recommend STP only if you have SIP amount in excess of 5000 and spread over the month in same AMC.
Otherwise its not worth the extra work for the meager difference in what you earn as interest in between.
Say for example if you have SIP in HDFC top200,HDFC prudence and HDFC Equity on 4th ,10th and 15th of the month and the SIP in each case is about 5000 then it makes sense to setup STP otherwise its not a big difference maker
Dear Sanjay, STP stands for Systematic Transfer Plan. Normally it’s usefull for those persons who do have a lump sum amount to invest in & want to invest systematically. Rest already discussed by dear justgrowmymoney.
IN SIP money lies in Savings Account until invested in the Scheme. This is on average 4%.
In STP you buy a Debt fund with the same AMC as the SIP is currently in and then do a STP (Systematic Transfer Plan) to your scheme. For the duration of the time between 2 SIPs this corpus in Debt fund grows – currently around 8.5% or so. Thus your money works harder.
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