Tip Tuesdays: Choose An STP When You Have A Lumpsum To Invest And An SIP When You Don’t

by Vinaya HS on August 31, 2010

in Finance

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When I consolidated my finances and started my investments in mutual funds, I opted for a Systematic Investment Plan (SIP) but the SIP-debits came from a lumpsum that I already had in my savings account. I think a better option would have been to park the lumpsum in a Systematic Transfer Plan (STP) and from there route the debits into the mutual fund(s) of my choice.

The SIP would be a better choice when you don’t already have a lumpsum to invest but instead rely on other regular sources of income such as your salary for the investment amount.

What do you think?

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 2 comments… read them below or add one }

Digamber September 2, 2010 at 9:43 AM

have lumpsum investment in ICICI pru Flexible Income Regular Growth with STP and Switch Out – To ICICI Pru Dynamic Growth

Nikhil Shah September 19, 2010 at 11:01 AM

Hi..

I am using STP Facility Since From Year 2000-2001 for my Retirement Corpus..Every Year me & my wife ..both deposit Rs.50,000/- each in (1).HDFC Equity Fund(2).Birla Front line Equity Fund(3).Franklin Bluechip Fund..ONLY Three Funds..Every Six months , we review our investment…

We are using STP as LADDER System….if you want any query,,pl write…
Thanks
Nikhil Shah
Mobile No.+ 91 98796 85266

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