SIP, SWP & STP: Three Tools That Automate When Money Moves
SIP, SWP, and STP automate three different directions of money movement in mutual fund investing. A Systematic Investment Plan (SIP) invests a fixed amount at regular intervals — providing rupee-cost averaging and, more importantly, removing emotion-driven timing decisions from the accumulation phase, with step-up SIPs letting growing income translate into growing investments. A Systematic Withdrawal Plan (SWP) is the reverse — the engine behind tax-efficient, self-managed retirement drawdown covered in tackl.finance’s retirement series. A Systematic Transfer Plan (STP) moves money gradually between schemes — commonly used to deploy a lump sum into equity gradually (reducing timing risk) or to implement the equity-to-debt glide path near retirement. This guide explains the FIFO principle governing how each instalment’s holding period is tracked for tax purposes (detailed further in Topic 18), and practical considerations for each tool.