MUTUAL FUNDS

WHY OPT FOR SYSTEMATIC TRANSFER PLAN? 

Published By Moushumi Mahanta | 27 Aug, 2024

A Systematic Transfer Plan in mutual funds enables regular transfers from one fund to another, balancing risk and optimizing returns by averaging costs and reducing volatility.

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Here are some advantages of STP:

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Rupee Cost Averaging

STPs allow regular transfers between funds, averaging out unit purchase costs over time and reducing the impact of market volatility.

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Risk Management

STPs enable shifting from higher-risk equity funds to lower-risk debt funds during market instability, preserving capital and ensuring stable returns.

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Optimised Returns

STPs balance investments by gradually moving from safer debt instruments to higher-return equity funds, aiming to optimise portfolio performance.

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Tax Efficiency

STPs aid in tax planning by strategically transferring funds between mutual funds with different tax treatments, minimizing tax liabilities.

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Discipline and Convenience

Automating investments through STPs promotes disciplined investing and consistent contributions toward long-term financial goals without manual intervention.

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