Last Updated on May 24, 2022 by Anjali Chourasiya

SIP, SWP, and STP are methods of systematically investing and withdrawing investments. Each of them serves a different purpose and caters to different requirements of investors. 

SIP helps you lower your purchase cost by spreading out your investments over a long time. STP, on the other hand, requires you to first invest a lump sum in an investment, from where you transfer a fixed amount repeatedly into some other scheme. Whereas SWP helps you withdraw a certain amount of money from one of your funds at regular intervals. 

Here we are going to discuss the major differences between SIP, SWP, and STP.

What is SIP?

A systematic investment plan or SIP is a method that helps you to invest in schemes systematically. It helps you to spread out your investments, i.e., invest a fixed amount of money into a chosen scheme in a regular manner over a long period. This helps with the automation of investment as the money is often auto-debited from your account once you activate a SIP and also goes on to instil investing discipline. It also prevents you from committing a huge amount of your money to the market at one go while retaining liquidity with you for your requirements. 

SIPs help average out the volatility in the market over the long run and provide you with the benefit of rupee cost averaging.

The investors often have the flexibility to choose the regularity of the investment as monthly, weekly, or days, and also the investment horizon that may be even across decades! An investment in a mutual fund through the SIP route may cost as low as Rs. 500. You may pause or cancel a SIP at any time.

What is STP?

Systematic Transfer Plan (STP) lets you move or transfer your money from one mutual fund scheme to another without the added hassle. You should choose this when you have a lump sum amount of money that you can invest. It does help you spread out your funds over time to reduce the impact of facing the market at its peak. 

However, unlike SIP here, you invest your entire lump sum in one scheme first. After that, you need to keep moving your money little by little to other schemes. 

This process mostly works between debt and equity schemes. The core idea is to earn a little extra while transferring your money from one fund to another. You can also choose the time, amount, and frequency with which you will move your funds.

What is SWP?

SWPs or systematic withdrawal plans let you withdraw a certain amount of money from your funds regularly. This scheme works best for retirees as they may need a regular income flow most of the time.

However, people also use this method to rebalance current portfolios or invest in other schemes. This works like a reversed STP, as in here, you invest a lump sum in a scheme and set a frequency for how you want to withdraw your money regularly.

Benefits of SIP, STP, and SWP

There are a few major benefits associated with these schemes. Let us take a look at it here:


  • This method ensures discipline and helps make investments into a habit.
  • It helps spread out your funds and drastically decreases the impact of volatility in the market.
  • Provides rupee-cost averaging benefit. 
  • With this method, you can build up a large corpus in the long run.


  • This scheme helps reduce the impact of market instability as well.
  • You can choose the frequency of withdrawal. 


  • No TDS.
  • A scope for regular income.
  • Provides flexibility.

Major differences between SIP, STP, and SWP

SIP entails an investment scheme where you invest a certain amount of money at regular intervals over some time. It can help you build up a significant amount of financial assets in the long run while reducing the impact of investing an enormous sum at once. These are one of the most stable mechanisms to invest.

With STP, you can choose the time or interval at which this process happens. This way, you protect yourself from the market’s instability by spreading out your funds. Mainly this method is used in investing in debt securities.

SWP lets you withdraw your money from the lump sum you invested in a scheme regularly. Again, you set the interval routine. This process works best for retirees and people planning for future scenarios.


With regular retail investors, the market is booming. However, the volatility of the market can be unnerving to some investors. This is where investment and withdrawal mechanisms like SIP, SWP, and STP come into the picture. Depending on your needs, capital, and timelines, you can choose one or a combination of these to ensure regular returns.

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