InvestmentFinancial Glossary
STP (Systematic Transfer Plan)
Definition
A facility that allows you to transfer a fixed amount or fixed number of units from one mutual fund scheme to another at regular intervals. STPs are commonly used to gradually move a lump sum from a liquid/debt fund into an equity fund, providing rupee-cost averaging on the lump sum.
Why It Matters
An STP is the smart way to deploy a lump sum into equity markets if you are uncomfortable investing the entire amount at once. Park the lump sum in a liquid fund and set up a weekly or monthly STP into your target equity fund over 3-6 months. This gives you averaging without sacrificing returns on the idle amount.