SIP vs SWP vs STP.. Its basics and importance in anybody Financial Life..

In India we still don't have enough penetration on the equity market. Merely 4-5 % of the total population invest in equity market and that too through Mutual Fund. Today in this article we would like to explain the 3 main weapon that an investor has in their hand while investing in a mutual fund scheme for long term wealth creation or to fulfill the dreams that he/she has for long term. And those 3 weapon are SIP SWP and STP which means  systematic investment plan, systematic withdrawal plan and systematic transfer plan..

   SYSTEMATIC INVESTMENT PLAN (SIP)..

SIP or Systematic Investment Plan is a systematic way of investing money in mutual fund scheme. An investor can invest money every month every quarter or year in a plan based on the goal he/she has for long term period. It encourages the investors to get the advantage of rupee cost averaging and the power of compounding for a long period of time. An investor can also reinvest the interest/ dividend earned from the scheme back on it  which have a positive impact on the returns..
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SYSTEMATIC WITHDRAWAL PLAN (SWP)..

SWP or Systematic Withdrawal Plan allows the investors to withdraw a particular sum of money at a regular interval from scheme. This system is specially designed for senior citizens who need a steady income flow after their retirement. It is on the other hand opposite of SIP where the investor invest lump sum amount in  a mutual  fund scheme and can withdraw regularly at a particular rate

SYSTEMATIC TRANSFER PLAN (STP)..

STP or Systematic Transfer Plan is an automated way of moving money from one fund to another. This scheme is chosen when one wants to invest a lump sum amount  in a fund but avoid to time the market as it contained huge risk. The basic idea behind an STP is to earn a bit more on lump sum while it is being invested in equity. An STP  can be done from an equity mutual fund to a debt mutual fund also.

These are the 3 important systematic system that exist in our mutual fund industry but maximum of investors don't know about them. Due to marketing SIP is a very well known system in present day but not SWP and STP . So hope this article will help people know more about the basic systems of mutual fund industry..

THANK YOU..



Comments

  1. DariyaJune 27, 2020 at 2:54 AM

    Thanks for sharing the information. That’s a awesome article you posted. I found the post very useful as well as interesting. I will come back to read some more Nifty50

    ReplyDelete

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