SIP, STP and SWP- The Unsung Trio of Financial Planning 

As Alan Lakein briefly puts, “Planning is bringing the future into the present so that you can do something about it now.” 

When you start your investment journey with mutual funds you are already aware of the many benefits that mutual funds offer ranging from diversification and liquidity to access to expert fund managers. As a result, you only end up paying attention to the choice of investment and do not focus on the way you invest. The great thing about mutual fund investments is that in addition to the many benefits that they offer they also allow you to automate your investments and withdrawals so that you can systematically invest and reap the benefits of your investments. You can choose to invest via the Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) route and you can opt to systematically withdraw your investments over a period of time through the Systematic Withdrawal Plan (SWP) route 

What is SIP? 

SIP stands for systematic investment plan. An SIP allows you to invest small amounts of money over time to build a corpus. By spreading out investments over a period of time, they help investors average their purchase cost. This prevents you from committing all your money at a market peak, and hence maximises returns. SIPs also bring discipline to investing and make investing a habit. 

What is STP? 

STP stands for Systematic Transfer Plan. It is an automated way of transferring money from one mutual fund to another. This plan is chosen when one wants to invest a lump sum amount and also wants to avoid market timing risk. So, the most common practice is transferring money from debt funds to equity funds. 

What is SWP? 

SWP stands for Systematic Withdrawal Plan. An SWP allows you to withdraw a specific sum of money from a fund at regular intervals. Such a system is particularly suited to retirees, who are typically looking for a fixed flow of income. SWPs provide the investor with a certain level of protection from market instability and help avoid timing the market. 


Small savings can help you to build wealth in the long term. No one has grown rich by just parking their funds in savings accounts. You need to take a step further and start with an SIP or if you are having a lump sum amount, then invest in a debt fund and start STP from it. 

A goal without a plan is just a wish, so build your own roadmap for your destiny. 

Idobro Impact Solutions has partnered with Tata Capital to make Financial Literacy accessible for all. For more information on the initiative and to get a deeper knowledge on financial terminology, visit:

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