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What is the ideal time horizon for doing a STP

What is the ideal time horizon for the STP, if you are investing a lump sum amount through STP route (from liquid funds to Equity (large cap and balanced funds)?

Apr 19, 2017 by Vikram, Hyderabad  |   Mutual Fund

Actually, there is no clear cut answer to this - what is the ideal time horizon of doing a STP. STP does well when the markets are volatile. Suppose you have done STP for a long horizon during which the markets were volatile then you will benefit immensely from rupee cost averaging.

However, if the markets are moving upwards and you have started the STP then you may not benefit much from it as market movement is one sided. In that situation, you will realize that lump sum investment would have been better.

However, as we are not sure about the markets, doing STP for a very long period is not advisable. In case your investment horizon is 5 years and above, then 12-18 month time frame may be good for transferring from liquid to equity funds through STP route.

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