Mutual Funds: How to utilise lump sum investment via STP in volatile markets?

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Also Read: What are flexible STPs and how do they adapt to the changing market conditions? STPs can be of three primary types: 1. Flexible STP: Investors can decide the amount to be transferred based on market volatility and predictions about scheme performance. 2. Fixed STP: The total amount to be transferred remains fixed, as decided by the investor.

3. Capital STP: This type transfers the total gains from market appreciation to another scheme with high growth potential. · No minimum investment amount mandated by SEBI, but most companies require a minimum instalment of Rs.

1,000. · A minimum of six transfers is usually required. · No entry load but exit load may be applicable on transfer depending on the debt scheme terms (liquid funds charge exit load within 7 days).

Also Read: 3 powerful mantras of investing in mutual funds: SIP, SWP and STP 1. Higher Returns: STPs allow investors to earn higher returns by shifting to more profitable ventures during market swings.

2. Stability: During market volatility, investors can transfer funds to safer investment schemes like debt funds, ensuring stable returns. 3. Rupee Cost Averaging: Helps lower average costs by investing in funds when their average price is low and selling when their market value increases.

4. Optimal Balance: Creates a portfolio with a mix of equity and debt instruments, balancing risk and returns. 5. Taxability: Transfers are subject to tax deductions if capital gains are incurred.

STPs are ideal for individuals with lumpsum investment amounts like annual bonus or inheritance or proceeds from property sale etc. and seeking high returns in the stock market over the long term. They are also suitable for those wanting to reinvest in safer securities during