STP Calculator (Systematic Transfer Plan for Mutual Funds)

At the start of each transfer month, the transfer amount moves from the source fund to the target fund. Both balances then earn one month's return at the rate you assumed for each, using a monthly rate equal to the annual rate divided by 12, the same convention as the CalcMate SIP calculator.

While the source fund has money, the target fund behaves exactly like a SIP of the transfer amount. Meanwhile the money still waiting in the source fund keeps earning the debt or liquid fund return, which is the point of an STP compared with keeping that money in a savings account.

If the source fund runs short, the last transfer is whatever is left and later transfers do not happen. If the transfers do not use up the whole lumpsum, the remainder stays in the source fund and keeps growing at its rate. After the last transfer, both balances simply grow until the end of the holding period you choose.

Two benchmarks are shown for context: the whole lumpsum left in the source fund, and the whole lumpsum put into the target fund on day one. With constant returns, the second is always the highest. An STP's purpose is not to beat it in a steady market but to avoid putting everything into equity at a single price, which matters only because real equity returns are not steady.

Each transfer is a redemption from the source fund, so it can carry an exit load and the gain on the units redeemed is taxable. Neither is deducted here; check the scheme documents of the funds you use.

Worked example: ₹12,00,000 put in a liquid fund earning an assumed 6.5% and moved to an equity fund at ₹1,00,000 a month for 12 months, with equity at an assumed 12%, grows to about ₹38.2 lakh after 10 years. Left in the liquid fund it would be ₹22.9 lakh. In the first year alone, the money waiting to be transferred earns about ₹37,000, far more than a savings account would.

With steady returns, investing the whole ₹12 lakh in equity on day one ends higher, at ₹39.6 lakh. An STP gives up a little of that in exchange for not putting everything in at one market price; it helps most when markets fall soon after you invest. Compare the two routes with the SIP vs Lumpsum Calculator, and for the reverse, steady withdrawals, see the SWP Calculator.

₹12 lakh STP: value after 10 years by STP length

Assumes 6.5% a year in the liquid fund and 12% in the equity fund, steady every year, before tax and exit loads. Real equity returns vary, which is why an STP is used.