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Planning to invest in Mutual Funds, first know what is the difference between SIP and STP, which is the best option?

Many people like to invest in Mutual Fund Scheme. In this, SIP (Systematic Investment Plan, SIP) is very popular among retail investors.

Let us tell you that in SIP, investors can invest in a fixed amount ETF and mutual fund scheme for a long time.

In this, investors get the benefit of compounding. Like SIP, an STP (Systematic Transfer Plan, STP) is also an option for investors. In this the investor has to invest a lump sum amount.

After investment, the investor can transfer it to equity schemes at regular intervals. In both these schemes, you can transfer money from one mutual fund to another.

SIP vs STP which is the best option

There is a lot of difference between SIP and STP. The objective of investment in these two is quite different. Investing in SIP means increasing the investment amount over a period of time, whereas investing in ultra short term funds in STP gives additional benefits to the investors.

However, we cannot compare the returns of SIP and STP. In both of these, investors get the benefit of rupee cost averaging. In this the investor does not need to worry about market fluctuations.

SIP is a very good option for those investors who can invest in lump sum. At the same time, those who are hesitant in investing in one go should invest in STP.

This means that the decision to invest in both depends on the goals of the investor. In such a situation, the investor should select an option only on the basis of financial plan.

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