Multiple choice

Which of the following is true about the Systematic Investment Plan?

  1. SIP does not give the benefit of rupee cost averaging

  2. STP in one scheme can be effectively used to get the benefit of SIP in another scheme

  3. SIP tells an investor when to invest and when to exit from a scheme

  4. All are false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Systematic Transfer Plan (STP) allows investors to transfer money from one scheme to another, often from a debt fund to an equity fund. This effectively creates a systematic investment in the target scheme, providing similar benefits to SIP. The other options are incorrect: SIP does provide rupee cost averaging, and SIP does not provide market timing guidance.

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