by dhirendra kumarby now there are probably very few mutual fund investors who have not realised that systematic investment plans sip are the best way to invest sips work by setting up a regular fixed investment every month from a returns perspective it gets you a buying price that is averaged over many months or years which eventually enhances returnsand any episode of falling stock prices end up benefiting the investor because it enables the sips to buy more units for the same amount of money most importantly the monthly instalment fits the income pattern that most investors havehowever there are plenty of times when one needs to invest money that has come in a lump sum and does not fit the monthly pattern if its meant for the longterm and youd like to invest in an equity fund then the most natural thing to do is to invest it all in one go till now this would also be the advice from anyone selling you the fund because thats the way to generate a big commission immediately although sebi has announced the end to this practice a few days ago this is a risky approach what if you invest and the markets tank 1020 you could lose a major chunk of your money and in all probability you would panic and redeem the entire sumthe solution is rather simple but relatively few investors are aware of the sips close cousin which effectively provides the same potential for higher returns and lower risk as sips do but for onetime investments this is the systematic transfer plan stp stp refers to a regular transfer of money from one fund to another its like an sip but the source of the money instead of being your monthly income just happens to be another mutual fund so how does this make senseit makes sense because you initially invest the money in a debt fund and they are highly predictable and nonvolatile for instance lets say you have received rs 10 lakh which you would like to invest in an equity fund this could be a bonus from an employer or asset sales or maybe a very lucky prediwali night if you invest the entire sum at one go you would likely be exposing the entire investment to any sudden decline in equity markets therefore what you need to do is to choose your equity fund and then choose a shortterm debt fund from the same fund company invest the entire sum in the debt fund and then instruct the fund company to transfer say rs 1 lakh into the chosen equity fund every monthin eleven or perhaps twelve instalments not ten because there will be returns all your money would have shifted to the equity fund your buying price would be the average of that time period thus insulating you from market fluctuationsof course stps much like sips are not foolproof if you actually look back at the markets over the last decade