Forget SIP, STP can earn you more money

STP may be to SIP what Brazil's Garrincha was to Pele. While the world knows all too well about the genius of Pele, the winner of three football world cups, few outside Brazil remember the brilliance of Garrincha, the architect of Brazil's 1962 World Cup win. Only a handful can recall that Pele hardly kicked a ball in that edition (he got injured early in the tournament) and that it was Garrincha who inspired the Seleção, as the Brazil team is popularly known, to win that World Cup. Likewise, while everyone knows about SIPs (systematic investment plans) and that SIPs are 'sahi hai', few investors are aware of STPs (systematic transfer plans). But the irony is that even if you call STPs the poor cousins of SIPs (at least in terms of their popularity), they can make you more money, especially if you have a lumpsum of money on hand. Let's explain how. Equity markets are known to be incredibly moody over the short term, making it less than ideal for you to put your money in the market in one shot. If you do so, your money will go up and down every second, causing you to panic if you are a relatively new investor. Hence, the better option while investing in an equity fund is to spread your investment over a few months or years, depending on h

This article was originally published on January 09, 2024.