SIP STP SWP Difference – Know which Mutual Fund Plan is right for you

Understand the SIP, STP SWP differences in simple Hindi. Know the meaning, comparison, benefits of SIP, STP, and SWP, and which Mutual Fund option is better for you.

SIP STP SWP Difference

What is SIP? (Systematic Investment Plan)


SIP i.e., Systematic Investment Plan, is a method in which you invest a fixed amount in a Mutual Fund every month. It makes the habit of investment regular and helps in creating long-term wealth.


To understand the SIP STP SWP Difference, it is important to understand the basics of SIP. In SIP, you invest gradually, which reduces the impact of market fluctuations (rupee cost averaging). This scheme is considered most suitable for salaried people.

What is STP? (Systematic Transfer Plan)


In STP, i.e., Systematic Transfer Plan, the amount is transferred regularly from one Mutual Fund to another scheme. Suppose you have invested ₹ 1 lakh in a lump sum, you can gradually transfer it to the Equity Fund through STP.


SIP STP SWP Difference STP is useful for those investors who first keep their money in a safe place (like a Liquid Fund) and gradually want equity exposure.

What is SWP? (Systematic Withdrawal Plan)


SWP i.e., Systematic Withdrawal Plan, is a way through which you can withdraw a fixed amount every month from a Mutual Fund. It is a better option for retired people or those who want passive income.


Understanding the SIP STP SWP Difference, SWP is useful for those who need regular cash flow, but also want to maintain the investment.

Difference between SIP, STP, and SWP (Comparison Table)


| Plan | Methodology | Suitable Investor | Focus |

| ----- | --------------------------------- | --------------------------- | --------------- |

| SIP | Regular investment with a fixed amount | Newbies | Wealth Creation |

| STP | Transfer funds from one fund to another | Risk Management seekers | Capital Balance |

| SWP | Fixed amount withdrawal from investment | Retired / Income seekers | Regular Income |


Which plan is right for you?


If you are a salaried person and want to start investing, then SIP is right for you. If you have a large amount that needs to be invested gradually, then STP is better. On the other hand, if you are retired and want a regular income, then SWP is the best option.


By understanding the SIP STP SWP Difference, you can make the right financial decisions at every stage of your life.

Easy examples to understand SIP, STP, SWP


 SIP: Invest ₹5,000 every month in a Mutual Fund.


 STP: ₹1 lakh in Liquid Fund, transfer ₹10,000 every week to Equity Fund.


 SWP: Withdraw ₹7,000 every month from the Mutual Fund and use it for expenses.

Advantages and disadvantages of SIP, STP and SWP

SIP advantages:


 Disciplined investment

 No need for market timing


SIP disadvantages:


 No withdrawal of money in an emergency


STP advantages:


 Volatility control

 Smart asset allocation


STP disadvantages:


 The process of switching funds can be lengthy


SWP advantages:


 Regular income

 Flexibility in tax


SWP disadvantages:


 Dependence on NAV, possibility of capital erosion

Things related to tax and returns 


 LTCG and STCG tax is levied in both SIP and STP.


 Tax is levied in SWP as well, but tax liability can be reduced with the strategy of withdrawals.  Given the SIP STP SWP Difference, proper tax planning is essential.

Top 5 FAQs related to SIP, STP, SWP


1. What is the main difference between SIP and STP?

In SIP, money goes from your bank to the fund, and in STP, it is transferred from one fund to another.


2. Can I run both SIP and SWP simultaneously?

Yes, you can plan both investment and withdrawal in the same portfolio.


3. For how long can STP be done?

You can choose STP from 6 months to 3 years.


4. Can SIP be stopped?

Yes, SIP can be stopped or discontinued at any time.


5. Which funds are suitable for SWP?

Debt Funds and Balanced Funds are generally considered suitable for SWP.

Conclusion: What to choose SIP, STP, or SWP?

Every investment plan has its own specialty. It is important to understand the SIP STP SWP Difference so that you can make the right choice as per your goals, age and risk profile.


SIP for beginners


STP for lump-sum investments


And SWP is best for regular income.


If you are planning to invest in SIP, STP or SWP, use the Mutual Fund comparison and calculator tools by Finowings – all the information in one place.

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