In this article, we quickly refresh what an STP or Systematic Transfer Plan is and what are the best options currently available to do an STP.

What is STP in Mutual Funds?

STP (Systematic Transfer Plan) is a way of regularly transferring funds from one mutual fund to another. To start STP in a fund of your choice, you need to hold units of another fund of the same fund house (AMC). For e.g. if you want to start STP in Reliance Small Cap, you need to hold units in any other fund (bearing no lockin) of Reliance Mutual Fund. Also, you need to decide the frequency of the transfer (weekly, monthly or quarterly) and the amount that you want to transfer.

What is STP good for?

STP is the best strategy for investing a lump sum in equity mutual funds. Equity mutual funds bear the risk of market timing (you may invest when the markets are high and may not get good returns in short term). Therefore, you should invest the lump sum amount in a debt mutual fund (safe funds) and start STP to the desired equity mutual fund.

STP Investment Plan

Here is a good STP plan for investing ₹3 lakh lump sum for long-term ( 5+ years)

  1. Invest ₹1 lakh in each of the source debt funds
  2. Set STP for ₹1000/week to the respective destination equity fund
  3. (Optional) Transfer ₹2000 everytime market falls by more than 1% (before 2:30 pm).

In almost 2 years, your entire investment will move to high growth equity mutual funds, a best average price (lowest risk).

To start the STP, you need to select the funds for your investment need. Here are 3 funds for different investment needs.

Best Funds for STP

STP Plans for Long Term (5+ years)

Source debt funds for lump sum investmentDestination equity funds for STP
HDFC Short Term DebtHDFC Small Cap 
Aditya Birla SL Corporate BondAditya Birla SL Small Cap
Kotak Banking & PSU DebtKotak Emerging Equity Scheme

STP Plans for Short-Term (3-5 years)

Source debt funds for lump sum investmentDestination equity funds for STP
Mirae Asset Cash ManagementMirae Asset India Equity
Kotak Banking & PSU DebtKotak Standard Multi Cap
Reliance Short TermReliance Large Cap

Click on the fund names to view individual fund performance.

How to Start STP?

Starting STP is very simple. All you need is the following –

  1. Get your investment account activated. Complete your onboarding at groww.in/onboarding and upload necessary documents.
  2. Select equity funds or equity funds portfolio (destination funds) in which you want to invest for long-term
  3. Select and invest in debt funds or debt funds portfolio (source funds) in which you will invest the lump sum. Make sure these are from the same fund house
  4. Call/Email Groww support at 91088-00604 or support@groww.in with the details of the equity funds or portfolio.

To start investing in mutual funds right now, click here! 

Happy investing!