STP (Systematic Transfer Plan) In Mutual Fund
STP is an acronym for Systematic Transfer Plan and is a feature that’s offered by many mutual fund houses. Opting for STP allows an investor to transfer a specific amount of money from one mutual fund to another. The transfer of funds from the source mutual fund to the target mutual fund can either be done through a swift single transaction or slowly over a specified period. There Are Two Types Of STP: Fixed STP: In this type, a fixed amount is transferred at regular intervals from the source scheme to the target scheme. This helps investors maintain a disciplined approach to investing and reduces the impact of market volatility. Capital Appreciation STP: In this type, only the capital appreciation (profits) generated in the source scheme is transferred to the target scheme. The principal amount remains invested in the source scheme. This strategy is often used when an investor wants to protect the principal amount while capturing any gains. STP can be a strategic tool for investors