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Investing

STP

Also known as: Systematic Transfer Plan

Automatically moving money from one fund to another in installments, usually debt to equity.

An STP shifts a fixed amount from one fund to another on a schedule. Typically you park a lumpsum in a safe liquid fund and drip it into an equity fund.

It is a way to do a big lumpsum without dumping it all in on one day, reducing the risk of terrible timing.

Meanwhile the parked money earns a bit more than a savings account while it waits to be transferred.

For example

Put a ₹6L bonus in a liquid fund and set an STP of ₹1L/month into an equity fund, spreading the entry over six months.

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