STP Calculator

How the STP Calculator works

A Systematic Transfer Plan (STP) moves a fixed amount every month from a lower-risk source fund (often a debt or liquid fund) into a growth-oriented target fund (usually equity). It is a way to invest a lump sum into equity gradually instead of all at once, which spreads out your entry price. Both funds keep earning their own returns during the transfer.

How it is computed

• iₛ = Monthly return of the source fund (annual ÷ 12)
• iₜ = Monthly return of the target fund (annual ÷ 12)
• The transfer each month is capped at whatever is left in the source fund.

Worked example

Starting with ₹10,00,000 in a source fund earning 6% and transferring ₹25,000 a month into a target fund earning 12% for 3 years: you move ₹9,00,000 in total. By the end the target fund is worth about ₹10,76,922, roughly ₹2,13,278 remains in the source, and the combined value is about ₹12,90,200. The chart shows money steadily shifting from the source (shrinking) to the target (growing).

Things to keep in mind

• An STP works best when you expect the target (equity) fund to outperform the source over time; the source return is usually modest since it is a parking place.
• Returns are not guaranteed, and each transfer is treated as a redemption from the source fund, which can attract capital gains tax and (for some funds) an exit load.
• Spreading entry over many months reduces timing risk, but in a steadily rising market a one-time lump-sum investment can sometimes end up ahead — STP trades a bit of upside for lower risk.