STP Calculator

An STP (Systematic Transfer Plan) calculator is a strategic tool that helps you plan the phased movement of a lumpsum amount from one mutual fund (usually a low-risk debt or liquid fund) to another (typically a high-growth equity fund). This staggers your market entry, significantly reducing the risk of investing a large sum at a market peak.

While a SIP involves investing new capital from your bank account periodically, an STP involves transferring already invested capital from a 'Source fund' to a 'Target fund.' This unique approach allows your un-deployed money to earn 5-7% in a stable liquid fund while being gradually moved into more aggressive equity assets.

The main benefits include rupee cost averaging, professional risk mitigation against high market volatility, and earning higher returns on idle cash compared to a savings account. It is the most effective strategy for deploying large bonuses, inheritance, or property sale proceeds into the stock market.

One of STP's greatest strengths is that the money awaiting transfer continues to grow. For example, a source liquid fund might earn 6% annually. Our calculator factors in this 'secondary growth' alongside the equity fund's higher returns, providing a comprehensive view of your total wealth accumulation.

Each monthly transfer is legally treated as a 'redemption' from the source fund and a 'purchase' in the target fund. This means you may be liable for Capital Gains Tax on any profit made in the source fund. However, for most debt/liquid funds, this tax is relatively small compared to the risk-mitigation benefits of the overall STP strategy.

An STP typically runs until the source fund is exhausted. However, you might choose to stop it if you meet your financial goal early or if the market undergoes a significant correction—in which case, you might choose to move the remaining source balance into the target fund as a lumpsum to capitalize on low prices.