SIP vs STP vs PMS: Which Fits Your Salary in 2026?
Compare SIP, STP, and PMS on costs, minimums, and risk. Real numbers in INR to help salaried investors in India pick the right route. Start with a plan.
## SIP vs STP vs PMS: Which Investment Route Fits Your Salary?
Priya, a 29-year-old product analyst in Pune, clears about ₹1.4 lakh a month after tax. Last month she did something quietly radical: she opened a spreadsheet, listed every EMI, subscription, and weekend dinner, and discovered she could invest ₹25,000 a month without touching her emergency fund. Then came the harder question. Where does that ₹25,000 go?
Her bank relationship manager pushed a [Portfolio Management](/blog/hdfc-bank-stock-slump-should-you-worry-a-guide-for-long-term-investors) Service. A colleague swore by a Systematic Transfer Plan. A fintech app nudged her toward a plain Systematic Investment Plan. All three sound like the same thing with different letters, and that confusion is expensive.
This guide is for readers who are past the very first step of budgeting and saving for beginners, and now need a decision. Here is the short version before the detail: a SIP is a monthly habit, an STP is a parking strategy, and a PMS is a bespoke portfolio for people with serious capital. They are not competitors. They are tools for different stages.
## The three routes, and who each one is for
**SIP (Systematic Investment Plan).** You commit a fixed amount to a mutual fund every month, usually on a chosen date. Minimums are low: ₹500 a month for most equity funds, ₹100 for some [index funds](/blog/equity-funds-see-31-inflow-jump-should-you-invest-now). This is the default for salaried investors building a first serious corpus.
**STP (Systematic Transfer Plan).** You park a lump sum in a liquid or debt fund, then move a fixed amount into an equity fund each month. Minimums typically start at ₹1,000 to ₹5,000 per transfer, though the initial lump sum matters more. This suits someone who has received a bonus, inheritance, or vested RSUs and wants to enter equity gradually instead of at one price.
**PMS (Portfolio Management Service).** A professional manager runs a concentrated portfolio of stocks in your name. SEBI sets the floor at ₹50 lakh per client. Most providers want ₹50 lakh to ₹1 crore, and annual fees commonly run 1.5% to 2.5% of assets plus a profit-share. This is for investors who already have a large, well-built mutual fund base and want differentiated, higher-conviction exposure.
## What each one actually costs
Costs decide outcomes more than most people admit. A 2% annual drag on a ₹25,000 monthly SIP compounds into a painful number over 20 years.
| Feature | SIP | STP | PMS |
|---|---|---|---|
| Typical minimum | ₹500 per month | ₹5,000 lump sum, ₹1,000 per transfer | ₹50 lakh (SEBI floor) |
| Entry cost | Nil | Nil | Nil, but onboarding paperwork |
| Annual cost | 0.2% to 1.0% (index to active fund) | Same as underlying funds | 1.5% to 2.5% plus performance fee |
| Tax on gains | 12.5% LTCG above ₹1.25 lakh on equity | Same as underlying funds | Same capital gains rules as direct stocks |
| Manager risk | Fund manager, diversified | Fund manager, diversified | Concentrated, single manager |
| Liquidity | Daily NAV | Daily NAV | Monthly or quarterly windows |
Two things stand out. First, the PMS fee is not a rounding error. On ₹60 lakh, a 2% fee is ₹1.2 lakh a year before any performance cut. Second, the tax treatment across all three is broadly similar for equity exposure, so cost and concentration, not tax, should drive your choice.
## The trap in the middle: STP into a PMS
This is where the recent chatter around SIP vs STP has muddied the water. Some distributors suggest using an STP to feed a PMS over time. Read the fine print. A PMS does not accept ₹10,000 tranches; the ₹50 lakh minimum applies at entry. What an STP can do is move money from a liquid fund into a mutual fund that you then redeem to fund PMS contributions. That is two layers of cost and paperwork for a benefit you could get by simply holding the lump sum in a liquid fund yourself.
Our view: if you are funding a PMS, do it with a clear lump sum and skip the STP theatre. If you are funding a mutual fund, an STP is genuinely useful for lumpy inflows.
## The goal decides, not the product pitch
Ask what the money is for, and the answer usually picks the tool.
- **Retirement in 25 years, ₹20,000 a month to invest:** SIP in a broad index fund plus one active flexi-cap fund. Nothing else.
- **₹15 lakh bonus from an employer, nervous about a market top:** STP over 6 to 12 months from a liquid fund into your chosen equity fund.
- **₹1.2 crore portfolio, bored of index returns, willing to accept concentration risk:** PMS, but only after you have a diversified core.
Notice that the first two overlap. Most salaried investors need a SIP core and an STP for lump sums. The PMS conversation should arrive years later, if at all.
## What we recommend
We would tell Priya, and most readers earning between ₹80,000 and ₹2 lakh a month, to do this:
1. **Build the SIP core first.** An index fund tracking the Nifty 50 or Nifty 500 at 0.2% to 0.3% expense ratio, plus a flexi-cap fund. Platforms like Zerodha Coin, Groww, or Kuvera make this a ten-minute setup.
2. **Use an STP only for lump sums.** Bonus, inheritance, or RSU proceeds go into a liquid fund (Parag Parikh Liquid or ICICI Prudential Liquid are common picks) and transfer monthly.
3. **Ignore PMS until ₹1 crore in [mutual funds](/blog/market-slump-or-not-5-habits-of-investors-who-build-wealth-quietly).** Below that, the fee drag and concentration risk are not worth the differentiation. Above it, firms like Marcellus, White Oak, and Alchemy run credible strategies, and you should compare three before signing.
If you are still working out how much you can invest, stop here. Go back to basic budgeting and saving for beginners, build a three-month emergency fund in a sweep-in FD or liquid fund, and start a ₹5,000 SIP. The product choice is the easy part once the habit exists.
## FAQ
**Can I start a PMS with less than ₹50 lakh?**
No. SEBI's minimum is ₹50 lakh per client, and providers can set higher floors. Any offer below that is either a mutual fund scheme or a regulatory problem.
**Is an STP better than a SIP?**
They solve different problems. A SIP builds a position from monthly income. An STP deploys an existing lump sum gradually. If you have a salary and no lump sum, SIP is your tool.
**Do I pay tax when I switch from the liquid fund to equity in an STP?**
Yes. Each transfer is a redemption from the liquid fund, so gains there are taxed. Short-term gains are taxed at your slab rate; holding beyond three years qualifies for long-term treatment at 20% with indexation for debt funds.
Frequently asked questions
Can I start a PMS with less than ₹50 lakh?
No. SEBI's minimum is ₹50 lakh per client, and providers can set higher floors. Any offer below that is either a mutual fund scheme or a regulatory problem.
Is an STP better than a SIP?
They solve different problems. A SIP builds a position from monthly income. An STP deploys an existing lump sum gradually. If you have a salary and no lump sum, SIP is your tool.
Do I pay tax when I switch from the liquid fund to equity in an STP?
Yes. Each transfer is a redemption from the liquid fund, so gains there are taxed. Short-term gains are taxed at your slab rate; holding beyond three years qualifies for long-term treatment at 20% with indexation for debt funds.
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