What is SIP,STP,SWP ?
A Systematic Investment Plan is a simple, convenient and disciplined way to meet your financial goals. It allows you to make the most of the growth potential of Mutual Funds. The investor invests a fixed amount on a periodic time interval to reach their goals. It helps you develop a discipline of regular investing and create more wealth over the long term. When you use the SIP facility in equity investing, you are able to take advantage of it's volatility by lowering your cost of investment.
The answer to these simple question lets you calculate your SIP amount
a. What is my goal?
b. How much do I expect to earn?
c. By when, do I want to reach my goal?
All the mutual fund houses have their SIP calculator that helps you arrive at the right amount to achieve your goals.
A Systematic Transfer Plan allows moving a fixed amount of money every interval from one mutual fund scheme to another. The investor can transfer from a debt scheme (relatively low risk) into an equity scheme (high risk) and vice versa. It helps you diversify your portfolio by letting you transfer a part of your investment to a different scheme.
Let us say you have invested an amount of Rs.100,000 in a debt mutual fund scheme (Scheme A) on January 01, 2019 at the Net Asset Value (NAV) of Rs.10. You then decide to transfer Rs.10000 on the 5th of every month to an equitymutual fund scheme (Scheme B). On specified dates, Rs.10000 will automatically be transferred from Scheme A to Scheme B at the Net Asset Value (NAV) at the time of the transfer.
Systematic Withdrawl Plan allows you to withdraw a pre-defined amount at fixed intervals from the amount invested in Mutual Funds. The investor determines the amount to be withdrawn and its frequency. This facility is mostly used when the investor is in need of regular cash flow to meet expenses. Systematic Withdrawal Plan (SWP) is the reverse of Systematic Investment Plan (SIP)
Lets us say you have invested an amount of Rs.100000 in a mutual fund scheme on January 01, 2019 at the Net Asset Value (NAV) of Rs.10. You then decide to withdraw Rs.5000 from your fund on the 1st of every month. On the specified date, the requisite number of units will automatically be redeemed from your holdings and the proceeds will be paid to you through the preferred payment mode.