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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

SIP vs STP vs SWP

In mutual funds, investors often hear three important terms - SIP, STP and SWP. These may sound technical, but they are actually simple and powerful facilities provided by mutual funds. They help investors invest, transfer and withdraw money in a disciplined and automated manner. Systematic Investment Plan This is the most commonly known concept. In an SIP, a fixed amount is automatically debited from your bank account on a fixed date and invested into selected mutual fund schemes. For...

SIP vs STP vs SWP

In mutual funds, investors often hear three important terms - SIP, STP and SWP. These may sound technical, but they are actually simple and powerful facilities provided by mutual funds. They help investors invest, transfer and withdraw money in a disciplined and automated manner. Systematic Investment Plan This is the most commonly known concept. In an SIP, a fixed amount is automatically debited from your bank account on a fixed date and invested into selected mutual fund schemes. For example, if a 30-year-old investor starts investing INR 10,000 per month for retirement and continues till the age of 55, the investment period is 25 years. Assuming a long-term return of around 12% per annum, this monthly investment can grow to approximately INR 1.70 crores. Please note, INR 10,000 is only a small amount used for illustration. Your SIP amount should be sufficient for your goals. Ideally, investors should try to invest at least 30% of their in-hand monthly income. The biggest benefit of SIP is discipline. You do not have to remember to invest every month. The process is automated. SIP also helps you invest through market ups and downs, reducing the stress of timing the market. That is why SIP is also popularly called Sapna-In-Progress. Systematic Transfer Plan In SIP, money moves from your bank account to a mutual fund. In STP, money moves from one mutual fund scheme to another. This is especially useful when you have a lumpsum amount but do not want to invest it into equity funds in one shot. For example, an investor has INR 20 lakhs to invest for the long term. He may worry about market volatility if the entire amount is invested at one go. In such a case, the money can first be parked in a debt mutual fund, and then gradually transferred to an equity mutual fund through STP. For example, INR 40,000 can be transferred every week over around 50 weeks. STP is flexible in terms of duration, frequency, amount and choice of schemes. STP gives comfort, automation and gradual participation in equity markets. Systematic Withdrawal Plan This is the exact reverse of SIP. In SIP, money goes from your bank account to a mutual fund. In SWP, money comes from your mutual fund to your bank account at regular intervals. SWP can be very useful after retirement. Suppose an investor has built a corpus of around INR 10 crores by the age of 55. He can set up an SWP to receive, say, INR 5 lakhs per month for his regular expenses. If the corpus is invested wisely with proper asset allocation, the investor can receive regular income and still allow the balance corpus to grow over time. To understand the power of this, consider an actual scheme’s past performance. A corpus of INR 10 crores would have grown to around INR 30 crores over 15 years, even after the investor withdrew INR 5 lakhs every month. In simple words, SIP helps you invest regularly, STP helps you transfer wisely, and SWP helps you withdraw systematically. Used properly, these three tools can make wealth creation and retirement planning more disciplined, automated and peaceful. (The author is Chartered Accountant and CFA (USA). Financial advisor. Views personal. He could be reached on 9833133605)

India Strikes, Targets Hit

India’s calibrated military response to the Pahalgam massacre signals resolve without reckless escalation.

A security personnel keeps vigil at Takhat Sri Harimandir Ji Patna Sahib following Operation Sindoor in Patna on Wednesday. Pic: PTI
A security personnel keeps vigil at Takhat Sri Harimandir Ji Patna Sahib following Operation Sindoor in Patna on Wednesday. Pic: PTI

The barbarous atrocity wherein Pakistan-sponsored terrorists slaughtered more than 25 persons, mostly innocent Hindu tourists, in Pahalgam on April 22 was a cowardly terrorist attack. No matter how much Pakistan may deny it, the ISI’s imprint was unmistakably present. The attack provoked a wave of collective anger and grief in India. Pakistan’s motive, which was to promote the selective killing of Hindus, was aimed at tarnishing India’s global image and send a fanatical message to provoke a strong reaction from India. It had hoped to create mayhem by exploiting Hindu-Muslim religious sentiments.


Such well-planned attacks, which call into question national security, cannot go unpunished. As emergency measures, India initiated several actions: suspending the Indus Water Treaty, cancelling visas of Pakistani nationals, reducing diplomatic relations, and closing the Attari-Wagah border.


But that was certainly not enough. Simultaneously, India launched diplomatic efforts to build international pressure on Pakistan by seeking to return it to the FATF grey list and to craft a befitting response that the global community would see as proportionate, yet effective. The objective was to act decisively without triggering a reckless response from Pakistan. This required proper planning at the level of government and armed forces, the deployment of appropriate platforms and weapons, and the protection of Indian citizens. The civil defence drill conducted nationwide was a step in the right direction.


A befitting reply came in the form of Operation Sindoor, executed on the intervening night of May 6 and 7. The operation appears to have been meticulously planned, involving all three services. The Indian Army maintained a close watch on the borders; the Navy ensured maritime vigilance; and the Indian Air Force delivered a deterrent strike on Pakistani soil. The goal was to inflict damage on terrorist infrastructure and hurt Pakistan’s morale. The Indian Air Force appears to have achieved its objectives.


The selection of platforms and weapons depends on the mission. For Operation Sindoor, the Dassault Rafale was ideal, equipped with Meteor beyond-visual-range (BVR) missiles, an advanced electronic warfare suite, and superior radar and communication systems. Rafale’s Thales RBE2 AESA radar and frontal stealth capability enabled pilots to operate with superior situational awareness and under high-pressure conditions.


India used a variety of high-precision, long-range weapons, including SCALP cruise missiles, HAMMER precision-guided bombs, and loitering munitions—giving it flexibility, accuracy, and the ability to strike selectively. The MBDA SCALP (or Storm Shadow) is a long-range, air-launched cruise missile designed for deep precision strikes. HAMMER (Highly Agile Modular Munition Extended Range), developed by Safran Electronics & Defense, is an air-to-ground system designed for medium-range tactical missions against both stationary and mobile targets. Loitering munitions, often referred to as ‘kamikaze drones,’ provide surveillance, target identification and precision engagement.


Using these systems, India targeted nine locations within Pakistan, including a Jaish-e-Mohammed base in Bahawalpur and a Lashkar-e-Taiba base in Muridke. These strikes specifically targeted key terror bases and training facilities - organisations long involved in attacks on Indian soil. By relying on advanced precision weaponry and real-time intelligence, the Army, Navy, and Air Force coordinated their efforts, carefully avoiding Pakistani military installations.


Reflecting on the action, the Indian Army declared: “Prhaaraay SnnihitaaH, Jyaay PrshikssitaaH – Ready to strike, trained to win.” It asserted that justice had been served.


In support of Operation Sindoor, the Ministry of External Affairs said it was essential to bring the perpetrators and planners of the April 22nd attack to justice. The MEA noted that, even 15 days after the attack, Pakistan had taken no verifiable action to dismantle terrorist infrastructure on its soil or in areas under its control. Instead, it had resorted to denials and counter-allegations. Intelligence monitoring of Pakistan-based terror modules indicated that further attacks were imminent. India, therefore, had a compulsion to both deter and pre-empt.


India has delivered a restrained yet clear message to Pakistan. Whether it is enough for Pakistan to learn a lesson remains uncertain. Given its past behaviour, India must remain fully prepared, not just for Pakistan’s provocations, but also for the strategic games of the China-Bangladesh-Turkey trio.


Jai Hind.


(The author is a retired naval aviation officer and defence analyst. Views personal.)

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