Comparison guide
STP vs SWP — Systematic Transfer vs Withdrawal Plans
STP deploys a lump-sum into equity gradually. SWP draws monthly income out. Same plumbing, opposite directions.
// stp — for deploying
Park a lump-sum in a liquid/ultra-short fund, instruct the AMC to transfer a fixed amount monthly into a target equity fund. You earn 6–7% on the parked balance and stagger entry into volatile equity.
// swp — for income
Redeem a fixed amount from your fund every month for monthly income — like a self-managed pension. Tax-efficient because each SWP redemption is a partial sale enjoying LTCG benefit after 1 year (equity) or slab rate (debt post-Apr-23).
// when to use which
Got a bonus, inheritance or retirement payout? Park + STP it over 6–12 months. Retired and need ₹50,000/month? Build a corpus first, then SWP it from a hybrid or debt fund.
// frequently asked questions
Yes — each STP transfer is a partial redemption from the source (usually a liquid fund). Liquid fund gains are slab-rate taxable, so the STP frequency and amount affect tax slightly.