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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)

PLAIN SPEAK

  • PTI
  • May 7, 2025
  • 3 min read

"Let us congratulate the Indian armed forces and Prime Minister Narendra Modi for the strike. It was a precision strike that destroyed nine terrorist camp sites. This time, the video footage of the airstrike is available, leaving no scope for anyone to seek proof of it. The attack on us will not be tolerated by Bharat. It will be avenged properly and we did it today.”

Devendra Fadnavis, CM, Maharashtra


“Tamil Nadu stands with the Indian Army against terrorism. With our Army, for our nation. Tamil Nadu stands resolute.”

M K Stalin, Chief Minister, Tamil Nadu


“On behalf of the people of Sikkim, I extend my deepest salute to our brave soldiers who delivered swift and decisive justice in response to the heinous terror attack in Pahalgam. This operation sends a clear message that India will not tolerate any threat to its unity and peace. We stand firmly with our armed forces and honour their sacrifice.”

Prem Singh Tamang, Chief Minister, Sikkim


"The wounds of Pahalgam still ache, but today, justice has begun to answer. Jai Hind!"

N Biren Singh, Former Chief Minister, Manipur


"Earlier through surgical and air strikes, India has sent a message to the world that anti-India activities, whether emanating from Indian soil or from outside the country, India will not tolerate it now.”

Gajendra Singh Shekhawat, Union Minister, Tourism


"Congratulations to Indian soldiers for safeguarding the sovereignty of the country and securing its citizens by giving a befitting reply to the Pahalgam attack. The country is proud of our armed forces.”

Sharad Pawar, President, Nationalist Congress Party (SP)


"A set of calibrated, calculated, precise strikes against terror targets. Exactly what I had advocated last week: hit hard, hit smart. I applaud the government and stand solidly with our armed forces. At the same time we have behaved in a manner that would not justify further expansion of the conflict. We have made our point and acted in self-defence.”

Shashi Tharoor, senior leader, Congress


“The world must show zero tolerance for terrorism."

S Jaishankar, Union Minister, External Affairs


"We are extremely proud of our Indian Armed Forces who have struck terror camps in Pakistan and PoK. We applaud their resolute resolve and courage. National unity and solidarity is the need of the hour and the Indian National Congress stands with our Armed Forces. Our leaders have shown the path in the past, and national interest is supreme for us.”

Mallikarjun Kharge, President, Congress


“Proud of our armed forces. #OperationSindoor is Bharat's response to the brutal killing of our innocent brothers in Pahalgam.”

Amit Shah, Union Minister, Home


"Took stock of the situation in border districts of J&K UT with all the senior administrative, police & district officials including DCs of all the border districts. I'm closely monitoring the situation & govt is fully prepared to deal with any eventuality. We will ensure safety of every citizen. Jai Hind!"

Manoj Sinha, Lieutenant Governor, Jammu and Kashmir


"OperationSindoor India remembers and India fights back. There is no room for terrorism. Jai Hind."

Conrad K Sangma, Chief Minister, Meghalaya


"Justice for the victims of Pahalgam begins. Operation Sindoor - Justice served. Nation supports. Jai Hind. Bharat Mata Ki Jay.”

Sunil Ambekar, Leader, RSS


"Fearless in unity. Boundless in strength. India's shield is her people. There's no room for terrorism in this world. We're ONE TEAM! Jai Hind.”

Sachin Tendulkar, Cricket legend


“The nation has complete faith in the capabilities of our armed forces, and stands united behind them. It is the strength of our military, the determination of our leadership, and the unity of our people that led to the success of Operation Sindoor.”

Ajit Pawar, Deputy CM, Maharashtra


“Yeh toh trailer hai, picture abhi baaki hai,” (bigger actions could still come). I thank the Prime Minister Narendra Modi and the Indian Armed Forces for showing strength and sending a strong message to Pakistan and the world. This particular operation gave justice to the families of those who were killed”.

Eknath Shinde, Deputy CM, Maharashtra


“Operation Sindoor is very emotional because the attack hurt many women, and in Indian culture, "sindoor" is a sign of a married woman’s pride. The operation was a fitting answer to those who tried to hurt India.”

Sanjay Raut, MP, Shiv Sena (UBT)

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