Do you know the difference between SIP, STP, and SWP? Find out


Mutual funds are a type of investment that is managed by professional people. In the stock market, if you want to buy or sell shares, you have to do its trading on your own. The decision has to be taken by you for that.

But, in the case of mutual funds, all decisions are taken by fund managers who are experts at studying markets. They are professional people. So, here chances of losses may decline due to professional expertise. For stock market trading, the person needs to be cautious of the market and has to continuously observe it. Which is not needed in the case of mutual funds.

Investment in mutual funds can be done in two ways: lump sum and SIP. Apart from SIP, the terms that are commonly used in mutual funds are STP and SWP.


It is a “systematic investment plan”. It is similar to the EMI of any loan. Once you register for SIP, every month the amount gets debited from your account. SIP’s amount differs from scheme to scheme. Generally, it starts from 100rs.

For doing SIP generally, biller, mandate, etc. are the options. They are available in specific banks.

The frequency of SIP can be selected as monthly or weekly. For liquid funds, SIP can’t be done due to its highest liquidity.

As per the investor’s preference, SIP can be paused or stopped. Moreover, SIP step-up facility is also available where you can increase the total amount of your SIP (certain conditions may apply)

Certain SIPs do provide insurance cover also.

Investors who want to save regular income can go for it. Conditions and benefits should be well-read and understood before investing.


It is a “systematic transfer plan”. As the name suggests, here the money gets transferred and that too systematically.

To be more precise, here the number of one scheme transfers to the other. E.g. One scheme is an equity scheme and the other is a liquid fund. So, you can start STP and invested amount of the equity scheme will start to transfer to liquid funds at regular intervals.

The added advantage of more NAV can be got here. If you feel your investment in a particular scheme is not giving lucrative returns, then you can go for STP.


It is known as a “systematic withdrawal plan”. This one is similar to SIP, but instead of debit here, money gets credited as per the selected frequency.

The amount will be automatically credited to your registered bank account. For that, first, the investment in one scheme should be done.

It is a good option for retired people, as their need for regular income is satisfied here. The amount will be credited until the whole amount gets transferred.

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