SIP (Systematic Investment Plan) is the easiest way to invest in mutual funds. Through this, you can invest money in installments indirectly in the stock market. You must have heard about SIP many times before.

But very few people would know about STP (Systematic Transfer Plan). Let us first know what is STP.

What is STP?

STP i.e. Systematic Transfer Plan is a means of investment. Through STP, you can transfer money from an equity fund to a debt fund. Under STP, investors can transfer a fixed amount to a debt fund within a fixed limit.

Why do investors transfer to debt funds?

There are many types of options available for investing in mutual funds. These include debt, hybrid, equity funds, etc.

Equity funds are risky, due to which investors want to move from equity funds to another fund. On the other hand, debt funds are considered safer than equity funds. Through debt funds, you lend money to the company in a way.

On the other hand, hybrid funds are a mixture of equity and debt. However, through STP, you can only transfer from equity to debt funds.

What is the difference between STP and SIP?

Both STP and SIP are a means of investing in mutual funds. However, both work differently.

Through SIP, you invest in a selected fund within a fixed limit and fixed amount.

On the other hand, through STP, you can transfer money from one fund to another.

If the risk of the stock market is high, then STP will be a better option because it gives the option to transfer money from equity to debt fund.

What is SIP?

SIP i.e. Systematic Investment Plan is very popular among investors. Through this, you can easily invest in mutual funds. There are many options available for investing in mutual funds. These include equity, debt, hybrid, and ETF, etc.

Investors can choose any fund according to their choice. The estimated return in mutual funds is 12 to 14 percent. However, the profit obtained in this also depends on the fluctuations of the market.

Investing money in mutual funds is less risky than investing directly in the stock market. Because in this your money is invested by an agent. Along with this, you can reduce the risk by choosing hybrid, debt, and ETF. However, these again give less returns than equity funds.

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