Investor Education
SIP, SWP & STP Explained
SIP, SWP and STP are simply different ways of putting money into or taking money out of mutual funds in a systematic manner. This page explains when each method is useful and how it can fit into your financial plan.
What is SIP?
SIP (Systematic Investment Plan) is a method of investing a fixed amount at regular intervals—commonly monthly—into a mutual fund scheme. It is like a monthly EMI towards your future goals, but instead of paying a loan, you are building assets.
- • Encourages disciplined investing, independent of market moods.
- • Averages your purchase cost over time (rupee cost averaging).
- • Works best for long-term goals: retirement, children's education, home, etc.
SIP does not guarantee returns. It is a convenient way to invest regularly into a market-linked product. Returns will still depend on the performance of the underlying scheme and markets.
What is SWP?
SWP (Systematic Withdrawal Plan) is the reverse of SIP. Instead of investing a fixed amount regularly, you withdraw a fixed amount at regular intervals (for example monthly) from your mutual fund investment.
- • Useful in retirement to generate a monthly income from your corpus.
- • Can complement pensions, rental income and interest from FDs.
- • Compared to simply taking interest from an FD, SWP can be more tax-efficient in certain cases—depending on holding period and tax rules.
The withdrawal amount, frequency, selected scheme and your risk profile need to be carefully aligned so that the corpus is not exhausted too early.
What is STP?
STP (Systematic Transfer Plan) allows you to move money in parts from one mutual fund scheme to another over a period of time. Typically, investors park a lump sum in a relatively stable fund and gradually transfer it into an equity fund.
- • Helpful when you have a lump sum but want to reduce timing risk in equities.
- • Common structure: invest lump sum in a liquid / ultra-short / short-duration fund, and STP to equity over 6–18 months.
- • Works best when the transfer horizon matches your comfort with market volatility.
STP is not a guarantee against loss. It simply spreads your entry into equity over time. Suitability depends on your horizon, risk profile and the nature of the lump sum (bonus, property sale, inheritance, etc.).
SIP vs SWP vs STP – quick comparison
SIP
Money flows: INTO fund
Fixed amount invested regularly. Best for salaried and others with predictable income building long-term wealth.
SWP
Money flows: OUT OF fund
Fixed amount withdrawn regularly. Suits retirees or those needing a planned income from an accumulated corpus.
STP
Money flows: BETWEEN funds
Transfers from one scheme to another over time. Useful for deploying a lump sum into equity gradually.
What should you do next?
Use our calculators to get a feel for numbers, then speak to us before committing real money so that your choices match your goals and risk profile.
Important Disclosures & Risk Information
- • HRP Wealth currently acts as an AMFI registered mutual fund distributor (ARN-342284) and IRDA authorized insurance consultant. We do not act as a SEBI registered investment adviser (RIA) as of now.
- • We may receive commissions and incentives from AMCs / insurers for the products you choose. We do not charge any additional advisory fee unless explicitly agreed in writing.
- • All information, illustrations, and calculator outputs on this website are for education and awareness only. They are not a recommendation to buy, sell, or switch any specific scheme.
- • Mutual fund investments are subject to market risks, including possible loss of principal. Read all scheme related documents carefully before investing. Past performance does not guarantee future returns.
- • Final product selection, asset allocation, and investment decisions should be taken only after a one-to-one discussion where we understand your income, expenses, risk profile, time horizon, and existing portfolio.
- • We do not provide intraday trading tips, guaranteed returns, or unofficial shortcuts. We never ask for your internet banking / OTP / login credentials.
