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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)

Leave cancelled, schools shut

  • PTI
  • May 8, 2025
  • 2 min read
People from various villages along the India-Pakistan border collect food at a temporary shelter on the outskirts of Jammu on Thursday. Pic: PTI
People from various villages along the India-Pakistan border collect food at a temporary shelter on the outskirts of Jammu on Thursday. Pic: PTI

Chandigarh/Jaipur: Amid escalating tensions between India and Pakistan, many states have announced the closure of schools, blackouts in border districts, and cancellation of leave of police personnel and administration officials.


The stringent measures were taken by Punjab, Haryana, Rajasthan, Gujarat and West Bengal after India struck terror infrastructure in Pakistan and Pakistan Occupied Kashmir in retaliation to the April 22 Pahalgam massacre that killed 26 people.


Punjab shares a 532-km border with Pakistan, Rajasthan about 1,070 km and Gujarat around 506 km. West Bengal shares a 2,217-km border with Bangladesh.


In Punjab, the leave of all police personnel has been cancelled while the state government has shut schools in six border districts, officials said on Thursday.


"Leaves should be granted only in special circumstances with the approval of the competent authority," an order issued by the DGP's office said.


All schools in six border districts of Punjab -- Ferozepur, Pathankot, Fazilka, Amritsar, Gurdaspur and Tarn Taran -- have been shut until further orders.


In Gurdaspur, there will be an eight-hour blackout starting at 9 pm on Thursday, said officials.


"Punjab shares a 532-km border with Pakistan. Therefore, the role of the Punjab government becomes extremely crucial during any military tension. All districts near the border have been placed on high alert," Punjab minister Aman Arora said on Wednesday


In neighbouring Haryana, the leave of state police personnel and those working in the health department has been cancelled till further orders.


According to a communication to the civil surgeons of all the districts across Haryana, it has been mentioned that all officials will have to remain present at their current places of posting and shall not leave the district headquarters.


In Himachal Pradesh, which also shares a border with Punjab, security has been beefed up in bordering districts, including Hamirpur, Una and Bilaspur.


With famous temples like Baba Balak Nath, Maa Chintpurni and Maa Naina Devi located in Hamirpur, Una, and Bilaspur districts, police have intensified security checks there, an official said.


The Rajasthan government too has cancelled leave of administrative and police personnel deployed near the International Border and closed schools in five bordering districts.


A blackout has been instituted in these areas from midnight to 4 am on Friday till further notice as a safeguard against the possible threat of air strikes.


Government and private schools have been closed in Sri Ganganagar, Bikaner, Jodhpur, Jaisalmer and Barmer districts as a precautionary measure, officials said on Thursday.


All Jodhpur colleges were also ordered to remain closed.

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