SIP Vs STP

I found the Expert Speak column in the last issue very interesting. While I am familiar with SIP, I couldn't fully understand the term "systematic investment through STP." Could you please guide me? - Dheeraj Sinha 

Editor Responds : Thank you for taking the time to write to us! A Systematic Investment Plan (SIP) and a Systematic Transfer Plan (STP) are both disciplined investment strategies, but they serve different purposes. SIP involves investing a fixed amount regularly into a mutual fund, typically an equity fund, helping investors benefit from rupee cost averaging and compounding over the long-term. It is ideal for those looking to build wealth gradually with small, consistent investments. On the other hand, STP allows investors to transfer a fixed amount periodically from one mutual fund to another, usually from a Debt Fund to an equity fund. STP is often used to manage market volatility or to deploy a lump sum amount in a staggered manner into equity markets, offering a balance between growth potential and risk management.