About the STP Calculator
This STP calculator models a Systematic Transfer Plan, where you park a lump sum in a liquid or debt mutual fund and transfer a fixed amount into an equity fund every month. Enter the lump sum, the monthly transfer, the expected returns of the two funds and how long you will stay invested, and it shows the value of each fund at the end, how many months the transfers run and the total gain.
Investors use an STP when they receive a bonus, inheritance or property sale proceeds and do not want to put everything into equities on one day. The money waiting in the debt fund keeps earning while the equity exposure is built up gradually, which averages the purchase cost much like a SIP. The calculator also compares the STP with investing the whole amount in equity on day one and with leaving it all in the debt fund.
Returns are assumed to be steady and compounded monthly (annual rate ÷ 12), with each transfer at the end of the month. Real fund returns vary, so an STP can beat or trail a lump sum depending on how markets move. Each transfer is a redemption from the debt fund and can attract capital gains tax, which is not deducted here.
With the default inputs, the total value at the end is ₹1,736,863.82. Change any value above to recalculate instantly.
How to use the stp calculator
- 1Enter the lump sum you will park in a liquid or debt fund.
- 2Enter the fixed amount to transfer to the equity fund each month.
- 3Enter expected annual returns for both funds (liquid funds ~6–7%, equity 10–12% long term).
- 4Choose how many years you will stay invested in total.
- 5Compare the STP result with the day-one lump sum and all-debt figures.
Formula and method
The calculator steps through every month of the investment period. The debt fund first earns one month of interest at the annual debt-fund return ÷ 12, then the transfer amount (or whatever is left, if less) moves to the equity fund. The equity fund earns its monthly return on the existing balance and receives the transfer at the end of the month.
Transfers stop once the debt fund is empty, and both funds remain invested until the end of the period. For comparison, the day-one lump sum grows as L × (1 + r_e/12)^(12 × years) and the all-debt option as L × (1 + r_d/12)^(12 × years). With steady returns the lump sum in the higher-returning fund always ends ahead; an STP earns its keep by reducing timing risk when equity prices swing.
- L
- Lump sum placed in the debt fund
- T
- Monthly transfer amount
- r_d, r_e
- Expected annual returns of the debt and equity funds
Worked examples
₹10 lakh STP at ₹50,000 a month for 5 years
The debt fund earns 7% while it waits, so ₹10 lakh supports 21 full transfers of ₹50,000 plus a final ₹16,439 in month 22 — ₹10.66 lakh moved in total. Compounding at 12% to the end of year five, the equity fund reaches about ₹17.37 lakh, versus about ₹18.17 lakh had the whole amount gone into equity on day one at the same steady return.
₹24 lakh STP at ₹1 lakh a month over 3 years
Interest of 6.5% on the waiting balance stretches ₹24 lakh into 26 monthly transfers totalling about ₹25.78 lakh. After three years the equity fund holds roughly ₹31.76 lakh at an 11% return.
Transfers that outlast the period
At ₹10,000 a month only ₹2.4 lakh moves across in two years, so about ₹11.23 lakh is still in the debt fund at the end and the equity fund holds only ₹2.70 lakh. Raise the transfer amount if you want full equity exposure sooner.
Frequently asked questions
What is an STP in mutual funds?+
A Systematic Transfer Plan automatically moves a fixed amount from one mutual fund to another of the same fund house at regular intervals — usually from a liquid or short-term debt fund into an equity fund. It lets a lump sum enter the stock market gradually while the waiting money earns debt-fund returns.
Is STP better than lump sum investing?+
Not always. If markets rise steadily, investing the lump sum on day one ends with more money, as this calculator shows. An STP reduces the risk of investing everything just before a fall and spreads your purchase price, which many investors value more than the small expected cost.
How is an STP taxed?+
Each transfer is treated as a redemption from the source fund, so gains on the transferred units are taxed under the rules for that fund type. Gains from debt funds bought after 1 April 2023 are taxed at your slab rate, while equity fund gains are taxed as short- or long-term capital gains when you eventually sell.
How is STP different from SIP and SWP?+
A SIP invests fresh money from your bank account each month, an SWP withdraws money from a fund to your bank account, and an STP shifts money between two funds you already hold. An STP is essentially a SIP funded from a debt fund instead of your salary.
How long should an STP run?+
Many advisers suggest spreading a lump sum over 6 to 24 months. Shorter periods keep you closer to a lump-sum result; longer periods give more averaging but leave money in lower-returning debt for longer.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.