Sudha has seen an ad talking about STP and SWP. Wanting to know more, she calls Yojak for details.

Yojak explains that with an STP or Systematic Transfer Plan an investor can typically invest a lumpsum in a debt fund and transfer a fixed amount regularly to a target equity fund, thereby getting the returns of the equity and at the same time staying protected with part investment in debt.

An STP can be done from an equity fund to a debt fund as well. If you are saving for goals like child's education, buying a home or retirement.

Advantages of STP are:

It helps to rebalance your Portfolio

STP helps in averaging out the cost and take advantage of market scenario

An SWP or Systematic Withdrawal Plan allows you to withdraw a designated sum of money from a fund at regular intervals. It is particularly suited to retirees, who are looking for a fixed and regular flow of income.

SWPs provide the investor a certain level of protection from market instability and help avoid timing the market.