Frequently asked questions
What is a Systematic Transfer Plan (STP)?
In an STP, you invest a lump sum amount in one scheme and periodically transfer a pre-defined amount from that scheme to another scheme on a pre-specified date. This transfer can be monthly, quarterly, or at other intervals.
What are the benefits of an STP?
Risk Management: By transferring investments systematically, STPs help manage risk, especially during market volatility.
Automated Transfers: STPs automate the transfer process, reducing the need for manual intervention.
Rupee Cost Averaging: STPs help in averaging the purchase cost over time.
Who should consider using an STP?
Investors looking to reduce risk through systematic investment and those who have a lump sum amount but prefer to invest it gradually over time should consider using an STP.
What is a Flex STP?
Flex STP is a type of STP where the transfer amount increases when the market falls. The goal is to invest more when the market is low and stick to your regular amount when the market is high.
How does a Flex STP differ from Normal STP?
Unlike Normal STP that transfers a fixed amount, a Flex STP adapts by transferring more when the market is low. The Flex STP amount is calculated using this formula:
Flex STP amount = (Fixed amount x number of instalments) – (market value of investments through Flex STP so far).
What are the advantages of a Flex STP?
Adaptability: It adjusts to market conditions, potentially enhancing returns.
Rupee cost averaging: Flex STP helps investors utilise rupee cost averaging to your advantage by ensuring that the average costs incurred while making purchases is lowered.
Who should opt for a Flex STP?
Investors who want to take advantage of market dips by buying more units when the market is low during the STP period, as more funds are transferred from the source scheme to the target scheme, should consider a Flex STP.
What is a Value STP?
Value STP is an advanced version of the Normal STP. It aims to buy more at low NAVs and less at high NAVs to achieve a target investment value.
How does a Value STP operate?
An investor sets a predetermined investment target value for their portfolio each time-period, such as weekly, monthly, or quarterly. The investor buys or sells units of the investment to achieve the target value at each revaluation point.
Value STP Amount: [First instalment amount X Number of instalments including the current instalment] - [Market Value of the investments through Value STP in the Transferee Scheme as on the date of transfer]
What are the benefits of a Value STP?
Value-based Transfers: It optimizes the transfer based on the valuation, potentially buying more units at lower prices.
Rupee Cost Averaging: Helps in reducing the average cost of investment over time.
Who should consider a Value STP?
Investors who want to capitalize on market dips by buying more units when the market is low and fewer units when the market is high during the STP period should consider a Value STP.
DSP Mutual Fund is the leading mutual fund investment company in India.
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