Last Updated on September 17, 2026 at 9:20 pm
A SIP, SWP or STP is an investment mode, not an instrument. Many still ask, “Which SIP can I invest in?” You do not invest in a SIP. You invest via a SIP. We explain why SIP, SWP or STP are not necessary to invest in mutual funds.
1. SIP is an automated way of buying units on the same day of each month or each quarter. Some people mistakenly opt for a weekly or daily SIP. There is no extra benefit in doing so.
A SIP will not make you disciplined. You have to build that on your own. A SIP ensures the AMCs generate profits even if you forget to invest monthly, which is why they like to sell the “discipline” bit.
You can invest manually online each month in less than a minute. If you don’t have the discipline to do this, you don’t deserve wealth.
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Yes, there is nothing wrong with an SIP, and you can choose it. But there is nothing wrong with investing manually, either. I recommend manual investments with aggressive increases in the amount you invest each year or month, and meticulous tracking of your investments. That is how you build wealth, not by starting a SIP for a small amount to clear your conscience.
Also, see: Myth Busted: SIPs do not reduce risk or enhance returns!
2. STP is a way in which a large amount is transferred from a less volatile asset to a more volatile asset. Typically, it goes from a liquid or arbitrage fund to an equity fund. AMCs promote STPs because they can lock in AUM (the lump sum) in their funds.
This is also not necessary. If you have a lump sum, manually invest a small amount each week or month and deploy it over a few months. Drawing this out will not provide any benefit!
Read more: Investing a lump sum in one-shot vs gradually (STP) in an equity mutual fund (backtest results)
3. SWP is aggressively marketed to draw regular income from a mutual fund while the rest of the corpus grows regularly. While setting up a SWP from a liquid fund, arbitrage fund, or money market fund is okay, avoid SWPs from equity funds, balanced advantage funds, aggressive hybrid funds, etc.
This is because if the NAV is volatile and does not move up for several months, more and more of the corpus will be depleted. Do not take those SWP backtests seriously. It will not be easy to handle such a time in retirement, especially when you do not have much of a corpus to work with.
You can invest some of your assets (if viable) in equity or equity-oriented hybrid funds after retirement. But you don’t need to use them as a regular income source. Redeem from them whenever you want for discretionary expenses and use safer assets for regular income.