What is STP?

STP allows investors to transfer money from one mutual fund scheme to another in installments, often used to move lump sum money gradually.

Why It Matters

STP can reduce timing risk, but taxation, exit load, and scheme suitability should be reviewed.

Simple Example

An investor may park a lump sum in a liquid or short-duration fund and transfer gradually to an equity fund through STP.

When This Term Matters

A lump sum needs gradual deployment
Market timing risk should be reduced
Tax and exit load impact is understood

Common Mistakes

Ignoring taxation on each transfer
Using unsuitable source or target schemes
Running STP without goal clarity
Assuming STP removes all market risk

Questions To Ask

What is the source scheme?
What is the target scheme?
What transfer period is suitable?
What tax and exit load may apply?

How FPnest Helps

Explain the term in simple language
Connect it with relevant FPnest products or services
Discuss suitability, risk, taxation, liquidity, and documentation
Help the client ask better questions before taking action