Optimising Systematic Transfer Plan

With the equity market behaving the way it is, many investors are in a dilemma about whether to invest fresh money or not, and how much and when. A systematic transfer plan (STP) can solve the dilemma. Historical data shows discipline helps in systematic, phased-out investing. That’s because at relatively lower market levels, you end up buying more with the same quantum of money. The concept of systematic investment plan (SIP) is similar to giving post-dated cheques for future payments. Unlike in an SIP, STP is where you have the money today, which you can park in a defensive (liquid or debt) mutual fund (MF) scheme and invest it systematically. Here, the post-dated cheques are pegged not to your future earnings but to the corpus in the defensive fund, called the source fund. From the source fund, equated amounts are moved to the target fund, which is, typically, an equity fund....