How to make STPs work for you?

How to make STPs work for you?

STP can be an optimal tool to enter Equity Funds and to also sweep your profits from Equity Funds.

  • We can STPs  to effectively deploy lump sum money in a systematic way into Equity Funds.

  • They can also be used to sweep your profits to a safer asset class such as Debt, as you near your goal.

  • If you have a large sum, avoid investing in one go and risk ill-timing the market.

  • Use STP to deploy the sum in a Liquid Fund and move it systematically to an Equity Fund.

  • While you average you cost in Equity, you balance money will be earning more than savings bank rate in a Liquid Fund.

  • The Liquid Fund can also double up as your Emergency Fund.

  • If you see a volatile market, you can also use shorter tranches such as 3-9 months to deploy money into Equity using STP.

  • STP can be used to exit your investments in Equity. Use it to move systematically from Equity to Debt. This helps ensure you do not ill-time your exit.

  • As you move money into a safer asset class such as Debt, you wealth lying in Equity will continue to compound and deliver.

  • Start an STP at least a year or two before you near your goal. This ensures all the profits you earned is protected in the Debt Fund. STP MUTUAL FUND


Investing in Mutual Fund includes paying money for different fees and charges. Know about these before investing:

  • FUND MANAGEMENT FEES: MFs hire competent Fund Managers to handle you investments. This is exchange for a fee.

  • OPERATIONAL COSTS: Funds also incur expenses while operating a MF scheme like legal costs, administrative expenses, audit fees, etc. all these are passed on to the investor.

  • ENTRY LOAD: Earlier, MFs used to charge a fee (as high as 2.25%) every time you invested. This has since been abolished.

  • EXIT LOAD: MFs charge a fee in case you redeem your investment before a certain period of time. This is called Exit Load. It’s usually a percentage of your investment.

  • TRANSACTION CHARGES: Every time you buy or sell MFs, Funds charge you a certain amount to take care of the Fund’s expenses involved in your transactions.

  • TER: It’s not easy to compare the fees under each header. You can look at the Total Expense Ratio (TER) instead. It calculates how much fee you pay for every rupee invested. 


MUTUAL FUND Tax Saving schemes

How to begin investing in Mutual Funds


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