An easy-to-browse ready reckoner for everyone, with lots of easy tips
USE SYSTEMATIC TRANSFER PLAN TO REDUCE RISK
1. An STP from an equity fund to a debt fund is a good idea to reduce exposure to risk.
2. This ensures that the wealth accumulated through the equity fund remains safe but continues to earn a healthy return through a debt fund.
3. To avoid switching costs, you should activate the STP only when your primary scheme has completed a year after the initial investment.
4. Avoid an STP where both the primary and transferee schemes are exposed to high risk, as having volatility on both sides could undermine the benefit of the STP.
5. STPs can be used to book profits in the equity fund in a phased manner and investing the same in a liquid fund, to possibly fetch you a better selling price over time.
6. If one doesn’t shift out of equities gradually when an important financial
requirement is nearing, goals can be jeopardised.
7. A year before your goal is to be reached, you should start an STP into a debt fund, removing money from the equity fund in a staggered manner.
8. STPs can, therefore, work as SWPs, where the money from an equity fund can be gradually withdrawn, but will flow into a debt fund and continue to grow instead of sitting in the bank.
9. As the latest tax treatment will apply to it too, similar ways of factoring it would also work.
2. This ensures that the wealth accumulated through the equity fund remains safe but continues to earn a healthy return through a debt fund.
3. To avoid switching costs, you should activate the STP only when your primary scheme has completed a year after the initial investment.
4. Avoid an STP where both the primary and transferee schemes are exposed to high risk, as having volatility on both sides could undermine the benefit of the STP.
5. STPs can be used to book profits in the equity fund in a phased manner and investing the same in a liquid fund, to possibly fetch you a better selling price over time.
6. If one doesn’t shift out of equities gradually when an important financial
requirement is nearing, goals can be jeopardised.
7. A year before your goal is to be reached, you should start an STP into a debt fund, removing money from the equity fund in a staggered manner.
8. STPs can, therefore, work as SWPs, where the money from an equity fund can be gradually withdrawn, but will flow into a debt fund and continue to grow instead of sitting in the bank.
9. As the latest tax treatment will apply to it too, similar ways of factoring it would also work.