STP (Systematic Transfer Plan) Calculator
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STP Transfer & Growth Projection
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Systematic Transfer Plan (STP) Model
Simulates moving a fixed sum monthly from a debt/liquid fund to equity, keeping the remaining debt portion earning interest.
Worked Example: ₹5 Lakhs lumpsum with ₹20,000 monthly STP for 24 months
Systematic Transfer Plans: How Nidhi Invested a ₹5 Lakh Bonus Safely During a Market Peak
Nidhi received a ₹5 Lakh performance bonus in January. The stock market was hitting all-time highs, and she was terrified of investing it all at once right before a potential correction. But keeping it in a savings account earning 3% felt like losing to inflation. Her advisor suggested a Systematic Transfer Plan (STP).
Nidhi deposited the ₹5 Lakhs into a low-risk liquid fund (the source fund) yielding 6% p.a. She then set up an STP to transfer ₹20,000 on the 10th of every month into a diversified equity fund (the target fund) yielding 12% p.a.
Over 24 months, her money worked double-time. The ₹20,000 monthly tranches bought equity units at different market prices, smoothing out volatility. Meanwhile, the remaining balance in her liquid fund quietly earned interest rather than sitting idle. At the end of the term, her total portfolio grew to ₹5.91 Lakhs, combining liquid yield and equity compounding.
STP is the ultimate shock absorber for lumpsum capital. It takes the emotion out of timing the market. If you have a large sum from a bonus, property sale, or inheritance, don't rush or stay frozen. Use an STP to transition your wealth smoothly from safety to growth.
Frequently Asked Questions
What is a Systematic Transfer Plan (STP)?
An STP is a strategy where an investor transfers a fixed amount of money systematically from one mutual fund scheme (usually a low-risk debt or liquid fund) to another scheme (usually an equity fund) within the same fund house.
Why should I use an STP instead of a lumpsum investment?
STP averages your purchase cost in equity funds over time, protecting you from investing a large sum at a market peak. Meanwhile, the remaining balance in your source debt fund continues to earn a steady yield, making your money work double-time.
Is there any tax on STP transfers?
Yes. Every transfer from the source fund to the target fund is treated as a redemption from the source fund. Capital gains tax is applicable on the transferred portion based on the holding period of the source fund.
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