SIP vs STP: Which Investment Strategy Offers More Benefits?

• SIP (Systematic Investment Plan) is suitable for investors with regular monthly income, allowing gradual investment over time.
• STP (Systematic Transfer Plan) is ideal for those with a lump sum, where money is first invested in a liquid fund and then systematically transferred to an equity fund.
• STP can offer higher overall returns as the initial lump sum earns more in a liquid fund (approx. 6%) compared to a savings account (approx. 3%).
• The benefit of STP depends on the contribution period; it might miss opportunities during market downturns if the fund is exhausted too early.
• Choose SIP if you have a regular salary; opt for STP if you have a lump sum and wish to invest gradually while earning returns on the uninvested amount.

Why It Matters: Choosing between SIP and STP based on income type optimizes investment returns.