Investment Guide: When it comes to money and especially investment, everyone wants to invest their hard-earned money in the right place and in the right way so that they get good returns in the future. But there are many ways to invest money, such as SIP, STP and SWP. If you are thinking of investing a little money every month or you want to get a certain amount every month after retirement, or you want to take a large amount and transfer it gradually, then these three tools can be useful for you. But first it is important to understand what these SIP, STP and SWP are and what is the difference between them.
What is SIP?
SIP i.e. Systematic Investment Plan is a method in which you can invest in mutual funds little by little. Like a fixed amount every month, every week or every three months. The biggest advantage of this plan is that you do not need to invest a huge amount at once. By investing money in small parts, you can gradually create a big fund. Suppose when the market goes down, you get more units and when the market goes up, you get less, due to this your investment balance remains good and the risk is also less. Also, the SIP money gets automatically reinvested, which gives the benefit of compounding. Apart from this, SIP can be started with just Rs 500 and money is automatically deducted from your bank account every month, so you do not have to remember every time. The special thing is that for those who get salary every month, SIP is the best option because with this they can easily save money for needs like retirement, children’s education or marriage.
What is STP?
STP i.e. Systematic Transfer Plan is for those people who have a large amount at once, such as bonus, maturity of FD, or money received from selling property. Investing so much money directly in the stock market can be scary, so STP is a wise option. In this, first of all your money is invested in a safe fund, like debt fund or liquid fund, which are safe. Then every month a fixed amount is gradually transferred from this safe fund to the equity fund. This process reduces the impact of market fluctuations. This means that the entire money does not have to be put in the market at once, which also controls the risk. Also, until the money is transferred to the equity fund, it remains in the debt fund and some returns are received there as well. One thing to keep in mind is that while doing STP, every transfer is considered a redemption, so tax can also be levied on it. Therefore, before adopting this plan, definitely get information about taxes and fees. STP is especially beneficial for those people who have a lot of money but do not want to take risk in the stock market or want to invest slowly.
What is SWP?
SWP i.e. Systematic Withdrawal Plan is for those people who have already invested money in a mutual fund and now want to get a fixed amount every month, quarter or year. That is, suppose you have invested five lakh rupees in a mutual fund and you want five thousand rupees to come into your bank account every month. For this, mutual fund companies sell some units from your fund and give you this money. The biggest advantage of SWP is that it is a great option for those who want regular income after retirement. With this, they keep getting a stable amount every month and they can easily fulfill their daily needs.