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The best way to manage a systematic transfer plan

Here are a few things you need to keep in mind while doing an STP

All fund houses offer systematic transfer plan (STP) facility which allows you to invest a sum of money into an equity fund of your choice in a staggered way. But an STP is not the same as a systematic investment plan (SIP). In an SIP, your money moves from your bank account into an equity fund. But in an STP, your money moves from a debt fund (preferably a liquid fund) into your equity fund, at periodic intervals. Here are a few things you need to keep in mind while doing an STP.

Same fund house

Ensure that both the transferor scheme (liquid fund) and the transferee scheme (equity scheme) belong to the same fund house. So, it’s best to first choose your equity scheme and then select an appropriate debt fund.


Typically, a fund house has similar transfer dates for STPs and SIPs. Additionally, many fund houses offer a weekly transfer day, say, every Monday or every Friday. For an STP, you need to enrol for at least six transfers.

Type of debt fund

A STP is recommended for transfers from a liquid scheme to an equity scheme. But you can mix and match, depending on your goals. You can put money in an ultra short-term debt fund or a short-term bond fund and then transfer the money to an equity fund. The money can go into an equity fund of your choice.


Just like an SIP, your STP can continue for as long as you wish. However, it’s best to finish your transfers within about six months. Reason being, an SIP is meant for those who have a ready stream of future inflows. So if you’re a salaried individual, you know that you will earn every month and that will feed your SIP. However, in an STP, you already have a lump sum that is waiting to get invested. This lump sum must start working as soon as possible. But since you also want to make volatility work in your favour, you stagger your investment by putting all the money in a liquid fund and then moving it into an equity fund, periodically. So, you invest in a liquid fund, first. That’s why it’s better to not stagger for too long and finish the transfer in about six months.

Residue money

It’s possible that after all your transfers are done, there is some money left in your liquid fund. This happens because your liquid fund corpus, for as long as it is there in the liquid fund, grows. Fund houses, rightfully, do not automatically transfer this to your equity fund as sometimes residue money can be as little as 100, or run into lakhs. You can either transfer it yourself or put in more money in a liquid fund later and start a fresh STP.

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