Types of Systematic Transfer Plans

There are different kinds of STPs in which you can invest. These are Flexi STP, Fixed STP and Capital Appreciation STP.

• Flexi STP- A Flexi STP allows you to transfer variable amounts from one fund to the other. A minimum requisite amount for transfer is fixed but the rest depends upon the investor. You can change the amount of money you want to transfer periodically depending on your discretion and the market risk involved.
  
  
• Fixed STP- In a Fixed STP you don't have the flexibility of the Flexi STP and you have to transfer a fixed amount of money that has been decided on a periodic basis from one fund to the other.
  
  
• Capital Appreciation STP- In a Capital Appreciation STP you invest only the profit you make from one investment into another fund.
  

  STP is suited for those investors who want to invest their money in equity funds but do not want to take high-end risks. STP allows them to invest their lump sum first in a liquid or debt fund and then judiciously transfer it to a target equity fund systematically.

  
  A Systematic Transfer Plan is helpful as it saves time and effort the investor would require to put in to transfer funds from one scheme to another. It helps you skip the extra steps required to reallocate funds and helps you protect at least a part of your investment.

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