What are Systematic Investment Plans (SIP), Systematic Withdrawal Plans (SWP), Systematic Transfer Plans (STP) ?
Systematic Investment Plan (SIP) is a monthly investment option. Investor deposits a fixed, small amount regularly, say, every month or quarter, into a particular mutual fund scheme at the prevailing NAV. The investor can get out of the fund i.e. redeem his units any time irrespective of whether he has completed his minimum investment in that scheme. In such a case his remaining post-dated cheques will be returned back to him. SIP is possible only in open-ended schemes except ETFs. Under Systematic Withdrawal Plan(SWP), the unitholder may redeem a fixed number of units on a monthly, quarterly or annual basis. Under Systematic Transfer Plan (STP), an investor in one scheme can keep transferring funds to another scheme, depending upon his market outlook. Investor may transfer a fixed sum of money on a periodic basis. A transfer is treated as redemption of units from the existing scheme at applicable NAV and an investment in units of the new scheme.
