What is a Systematic Transfer Plan?
An STP is a risk mitigation strategy. Instead of investing a lump sum directly into equity and facing immediate market risk, you park the money in a safer Debt/Liquid fund. Then, a fixed sum is systematically transferred to an Equity fund every month.
Intelligence Insight: STPs give you the best of both worlds: your idle lump sum earns better returns in a debt fund (compared to a savings account), while you still benefit from Rupee Cost Averaging in the equity fund!