The process of the entire STP is very important because it enables the investor to make the best use of the money that is already present with them. The investor would want to invest the available amount into equities, but they could be faced with a typical problem.
On one occasion investment into equities might turn out to be very costly, because this will concentrate the investment risk at one particular point of time. The main plan in such a situation would be to ensure that the initial lump sum amount is invested into debt and from this debt there is a transfer of a regular sum of money each month into equities.
This will guarantee that the aim of achieving a regular investment into equities is done and at the same time there is also the protection of the investment in the interim time period.
There have been a bunch of upheavals as far as the debt mutual funds are concerned because of the increase in the yields that have been witnessed in the Market. In such a situation, the investor has to make certain that the debt investment does not have any risk. The debt investment will be into funds that do not carry much of a risk of a decline in value. This will signify selecting liquid or money Market Mutual funds that will usually not see wearing away in the value of the investment.
The transfer then is done to an equity-oriented scheme each month by giving the required instructions to the mutual fund. This ensures that the entire process is completed automatically each month because the commands will not have to be given each month and at the same time the process is completed effortlessly without much of a problem.
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