3 powerful mantras of investing in mutual funds: SIP, SWP and STP

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financial goal is set right by properly planning his/her financial transactions. Once the planning is done, only a systematic investment approach will help them achieve their goals. What are those systematic ways to reap the benefits of your investment? These are the three mantras of investing in mutual funds.

1. SIP 2. STP 3.

SWP Let us discuss each in detail. SIP is known as a systematic investment plan. To invest in a mutual fund through SIP an investor doesn’t need to have fundamental or technical knowledge of the market.

He can invest regardless of how the market condition is. Let us understand SIP with an example. If person A wishes to invest ₹5000 per month let us take two scenarios.

So through SIP one can buy a higher quantity of units when the market is down, while the value of investment increases when the market is in a rally. So, an SIP makes investing easy. The performance of the fund can also be tracked through one’s smartphone and he/she can build a huge corpus through the power of compounding.

STP is known as a systematic transfer plan. STP allows an investor to transfer the investment from one mutual fund to another mutual fund. STP can be done between the same fund houses or from one fund house to another.

Let us understand STP with an example. If person A has initially invested ₹5,00,000 in an equity large-cap fund. We know that large-cap funds are less volatile and provide stability in investment.