Read in: 1min, Published On , 15 Aug 2016 By ET Wealth
People,after receiving a bonus, often resort to binge spending. Some, however, decide on investing this windfall wisely for future gains. Financial planners say it’s wiser to invest, at least a large part of the bonus amount, with an eye on the future.
One of the best ways to invest this windfall is to divide this sum into several small parts and then invest those small sums in an equity fund in an orderly manner. This is called systematic transfer plan, popularly STP.
Under an STP structure, the investor puts a large sum of money (here the bonus amount) in a short term debt fund with no exit load. Then the fund house is mandated to transfer a pre-fixed sum of money to an equity fund at a regular interval.
SETTING UP AN STP
Invest the lump sum amount in a low-risk short term debt scheme
Choose the equity scheme where the funds will be invested for the medium/long term
Fill up the STP form with details of transferor fund (debt scheme) and transferee fund (equity scheme)
Choose the STP start and end dates, frequency of transfer, amount of money to be transferred
Remember to keep enough funds in the transferor fund
SOME OTHER SMART WAYS TO USE BONUS MONEY
Top up health plans
Invest for the short term/medium term/long term goals
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