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Difference between revisions of "Systematic Transfer Plan"

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I will give an instruction that on 7th of every month, switch Rs. 1000
 
I will give an instruction that on 7th of every month, switch Rs. 1000
  
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This way, i will give 5 instructions for 5 differnent dates
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This way, i will give 5 instructions for 5 different dates
  
 
So every week, 1k will get transfered.
 
So every week, 1k will get transfered.
Line 42: Line 42:
 
And switches will automatically take place.
 
And switches will automatically take place.
  
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Switch gets stopped when debt fund dosent have minimum money.
+
Switch gets stopped when debt fund does not have minimum money.
  
 
Got it?
 
Got it?
 +
==Daily STP Method==
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Assume that you have Rs. 2.5 Lakhs allocation to the Reliance Smallcap Fund - Direct Plan - Growth Option.
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 +
It is never a good idea to invest the whole amount in a single go in any Equity scheme.
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 +
So, we will first invest the funds in a [Liquid Mutual Fund Schemes|liquid mutual fund scheme] and then give a Daily STP instruction to transfer the funds at the rate of Rs. 1000 per day to the target scheme.
 +
 +
Because we will be investing in the target equity scheme every day, cost-averaging works better.
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 +
To stat the process, login to your Reliance MF Website at https://investeasy.reliancemutual.com/online
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 +
Invest your surplus funds first in Reliance Liquid Fund - Cash Plan - Direct Plan - Growth option.
 +
 +
The investments in the liquid scheme do not carry any entry or exit load which means it be moved out easily.
 +
 +
After the investment is made, on the next working day, give a Daily STP instruction, under Systematic Investments option.
 +
 +
Select the source as Reliance Liquid Fund - Cash Plan - Direct Plan - Growth option
 +
 +
Select the target scheme as Reliance Smallcap Fund  - Direct Plan - Growth option
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 +
Enter the amount as Rs. 1000
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 +
Enter frequency as Daily.
 +
 +
The funds will move from your temporary scheme to the target ELSS scheme daily and automatically.
 +
 +
In the above example, Rs 2.5 Lakhs / Rs 1000 per day = 250 working days
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The Reliance MF website will select the start and end dates automatically.
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Usually, the start date will be 7 days from giving the STP instruction.
 
===Related Topics===
 
===Related Topics===
 
*[[Introduction to Mutual Funds]]
 
*[[Introduction to Mutual Funds]]
 
*[[Mutual Fund Units]]
 
*[[Mutual Fund Units]]
 
*[[New Fund Offer]] (NFO)
 
*[[New Fund Offer]] (NFO)
−
*[[Ongoing New Fund Offers]] (NFO)(List updated on Mar 2, 2017)
 
 
*[[Net Asset Value]] or NAV
 
*[[Net Asset Value]] or NAV
 
*[[Know Your Customer]] / KYC
 
*[[Know Your Customer]] / KYC

Revision as of 15:25, 13 December 2017

HomePersonal FinanceMutual FundsEquity

STP stands for Systematic Transfer Plan.

It works in a similar manner to Systematic Investment Plan and Systematic Withdrawal Plan (SWP) but with a difference.

It is a way of investing in which funds from an already invested source mutual fund scheme can be transferred to a destination mutual fund scheme.

In this method, we can explicitly specify the dates on which the funds need to be moved.

This method can be used only when both the source and destination schemes are managed by the same Asset Management Company.

Example 1

I can first invest in DSPBR Short Term Fund and then give a STP instruction to transfer funds to DSPBR Small and Midcap Fund. This is allowed and acceptable.

Example 2

I can first invest in DSPBR Short Term Fund and then try to give a STP instruction to transfer funds to Reliance Smallcap Fund. This is not allowed and not acceptable because DSPBR and Reliance are two different AMCs.

Example 3: Practical implementation

Allowed STP Dates are: 01,07,14,21,28

The dates differ from one AMC to another.

For instance assume i made Rs. 25000 investment in a debt fund

I want to switch Rs. 5000 to equity fund per month

So, i will give that switch instruction here

I will give an instruction that on 1st of every month, switch Rs. 1000

Then i will add another STP instruction

I will give an instruction that on 7th of every month, switch Rs. 1000

This way, i will give 5 instructions for 5 different dates

So every week, 1k will get transfered.

When there no funds in your debt fund. the stp automatically gets stopped.

So i just make sure that when ever i get some big amount, i put it into debt fund.

And switches will automatically take place.

Switch gets stopped when debt fund does not have minimum money.

Got it?

Daily STP Method

Assume that you have Rs. 2.5 Lakhs allocation to the Reliance Smallcap Fund - Direct Plan - Growth Option.

It is never a good idea to invest the whole amount in a single go in any Equity scheme.

So, we will first invest the funds in a [Liquid Mutual Fund Schemes|liquid mutual fund scheme] and then give a Daily STP instruction to transfer the funds at the rate of Rs. 1000 per day to the target scheme.

Because we will be investing in the target equity scheme every day, cost-averaging works better.

To stat the process, login to your Reliance MF Website at https://investeasy.reliancemutual.com/online

Invest your surplus funds first in Reliance Liquid Fund - Cash Plan - Direct Plan - Growth option.

The investments in the liquid scheme do not carry any entry or exit load which means it be moved out easily.

After the investment is made, on the next working day, give a Daily STP instruction, under Systematic Investments option.

Select the source as Reliance Liquid Fund - Cash Plan - Direct Plan - Growth option

Select the target scheme as Reliance Smallcap Fund - Direct Plan - Growth option

Enter the amount as Rs. 1000

Enter frequency as Daily.

The funds will move from your temporary scheme to the target ELSS scheme daily and automatically.

In the above example, Rs 2.5 Lakhs / Rs 1000 per day = 250 working days

The Reliance MF website will select the start and end dates automatically.

Usually, the start date will be 7 days from giving the STP instruction.

Related Topics

HomePersonal FinanceMutual FundsEquity

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