1. "Transferring" an already invested amount from one MF to another actually involves simultaneous redemption and purchase, both of which should be done with minimal effect of charges and taxes on the value realized as far as possible.
2. STP route is actually an extension of SIP way of investing - while SIPs allow you to invest small amounts, STPs enable you to transfer a large amount - into funds of your choice at regular intervals.
3. It is worthwhile to hold the redeemed money of your old equity fund in a low-risk debt fund and periodically keep switching a part of it into the new equity fund using STP.
4. You can also use STP to transfer your money into more than one new fund at the same time.
5. STP in an equity market works best when the market exhibits volatility as you can reduce the risk of over-exposure to equity which may happen in the lumpsum mode of investment.
6. Through STP, you can continue to earn returns on a lump sum, even as you do cost averaging by investing it systematically.
7. Another benefit of STP is that even if the NAV declines in one fund, it’s possible that it may rise in the other scheme, limiting your losses.
8. It is, therefore, best to activate an STP, without incurring switching costs, for redeeming your old equity fund into a short-term debt fund, and then use another STP to invest from it into your new fund periodically as per your convenience.
2. STP route is actually an extension of SIP way of investing - while SIPs allow you to invest small amounts, STPs enable you to transfer a large amount - into funds of your choice at regular intervals.
3. It is worthwhile to hold the redeemed money of your old equity fund in a low-risk debt fund and periodically keep switching a part of it into the new equity fund using STP.
4. You can also use STP to transfer your money into more than one new fund at the same time.
5. STP in an equity market works best when the market exhibits volatility as you can reduce the risk of over-exposure to equity which may happen in the lumpsum mode of investment.
6. Through STP, you can continue to earn returns on a lump sum, even as you do cost averaging by investing it systematically.
7. Another benefit of STP is that even if the NAV declines in one fund, it’s possible that it may rise in the other scheme, limiting your losses.
8. It is, therefore, best to activate an STP, without incurring switching costs, for redeeming your old equity fund into a short-term debt fund, and then use another STP to invest from it into your new fund periodically as per your convenience.