Feature

SWP (Systematic Withdrawal Plan)

STP (Systematic Transfer Plan)

Definition

Withdraws a fixed amount or units from a mutual fund scheme and credits to bank account at set intervals

Transfers a fixed amount or units from one mutual fund scheme to another at set intervals

Purpose

To create a regular income stream from mutual fund investments

To shift investments from one scheme to another to manage asset allocation

Ideal For

Retirees or those needing steady income from investments

Investors wanting to systematically move investments (e.g., from debt to equity)

Source of Funds

Existing mutual fund investments – periodic withdrawal

Transfer from one existing scheme to another existing scheme – usually Equity to Debt or Debt to Equity

Destination of Funds

Bank account of the investor for liquidity and income needs

Another mutual fund (usually equity for growth or debt for safety)

Risk Factors

Reduces market risk but may deplete corpus over time

Market risk depends on the target fund; helps manage entry/exit timing

Liquidity

Provides direct liquidity; funds credited to bank account

Funds remain invested but in a different scheme/asset class

Flexibility

Allows periodic withdrawals (monthly, quarterly, etc.)

Allows periodic transfers (monthly, quarterly, etc.)

Impact on Corpus

Gradual withdrawal reduces invested corpus, affecting future returns

Helps optimize allocation and reduce risk over time