We couldn’t stress enough that one of the better ways to invest in equity mutual funds is through a systematic investment plan (SIP). But if you have a lump sum, there is a tool that is quite like an SIP. Called systematic transfer plan (STP), this is a facility that lets you invest your lump sum corpus in a debt fund and then transfer a fixed sum of money, at periodic intervals, to an equity fund. This ensures that while your money remains in a debt fund, it gives you slightly higher returns than what your savings bank account would have—had you deposited it there and then done an SIP. That’s the easy part. The question is: which debt fund to choose for an STP? Most fund houses, especially the large ones, have many debt funds. They start from the basic set of liquid and ultra short-term funds to short-term funds to long-term debt funds like bond funds and government securities (g-sec) funds. Technically, you could do STP from any of these funds to any equity fund of your choice. The only condition that mutual funds impose upon you is that both the outgoing fund (debt fund, in this case) and the incoming fund (equity fund) have to be from the same fund house.
