STP Calculator
A Systematic Transfer Plan (STP) lets you invest a lump sum in one mutual fund — typically a liquid or debt fund — and then automatically transfer a fixed amount every month into another fund, typically an equity fund. This gradually moves your money into equities over time instead of investing the entire lump sum at once, while the un-transferred portion keeps earning returns in the source fund.
Our STP Calculator lets you enter your total investment, the monthly transfer amount, the expected return rates of both the source and target funds, and your STP time period. It then shows you the remaining balance in the source fund, the total amount transferred, the value it has grown to in the target fund, and the combined total value at the end of the period.
STP Calculator Formula
Unlike a simple SIP or lump sum calculation, an STP involves two funds growing simultaneously, with a fixed amount moving from one to the other every month. The calculator simulates this month by month:
Source Balance(month) = [ Source Balance(month − 1) × (1 + iₛ) ] − Transfer Amount
Target Balance(month) = [ Target Balance(month − 1) × (1 + iₜ) ] + Transfer Amount
Where:
- iₛ = Source fund's expected monthly rate of return (annual rate ÷ 12 ÷ 100)
- iₜ = Target fund's expected monthly rate of return (annual rate ÷ 12 ÷ 100)
- Transfer Amount = The fixed amount moved from the source fund to the target fund each month
This repeats every month for the chosen STP period. If the source fund balance ever falls below the transfer amount, only the remaining balance is transferred and the source fund is considered exhausted from that point. The Total Value at the end is the sum of whatever remains in the source fund plus the full value of the target fund.
Example Calculation
Suppose you invest ₹5,00,000 in a liquid (source) fund and set up an STP of ₹10,000 per month into an equity (target) fund, for 3 years. Assume the source fund earns 6% p.a. and the target fund earns an expected 12% p.a.
- Total Investment (Source Fund): ₹5,00,000
- Monthly Transfer Amount: ₹10,000
- Source Fund Return: 6% p.a. | Target Fund Return: 12% p.a.
- STP Period: 3 years (36 months)
| Type | Details |
|---|---|
| Source Fund Remaining Balance | ≈ ₹2,04,979 |
| Total Amount Transferred | ₹3,60,000 (₹10,000 × 36 months) |
| Target Fund Value | ≈ ₹4,30,769 |
| Total Value (Source + Target) | ≈ ₹6,35,748 |
Over the 3-year STP period, ₹3,60,000 gets systematically moved into the equity fund, growing to approximately ₹4,30,769 by the end. Meanwhile, the remaining ₹2,04,979 still sitting in the source fund has continued earning its own (lower) return throughout. The combined total value of both funds comes to approximately ₹6,35,748, compared to the ₹5,00,000 originally invested — reflecting the benefit of the entire amount staying invested and earning returns throughout the transfer period, rather than sitting idle.
FAQs about STP Calculator
What is an STP (Systematic Transfer Plan)?
An STP is a facility that lets you invest a lump sum in one mutual fund scheme and transfer a fixed amount at regular intervals — usually monthly — into another scheme, typically from a debt/liquid fund into an equity fund, within the same fund house.
Why use an STP instead of investing the lump sum directly in equity?
An STP spreads your equity exposure gradually instead of investing the entire amount at once, which reduces the risk of investing a large sum right before a market downturn. Meanwhile, the amount waiting to be transferred continues to earn a return in the source fund instead of sitting idle.
What is the difference between STP and SIP?
A SIP typically involves fresh money from your bank account being invested at regular intervals. An STP instead moves money that is already invested in one fund into another fund — no new money is added, it is simply transferred between two existing investments.
Which fund should I use as the source fund for an STP?
Liquid funds or ultra-short duration debt funds are commonly used as the source fund for an STP, since they aim for relatively stable, lower-risk returns compared to equity funds while your money waits to be transferred.
What happens if the source fund balance runs out before the STP period ends?
If the source fund balance falls below the fixed transfer amount before the STP period is complete, only the remaining balance is transferred in that final installment, and no further transfers occur. This calculator accounts for that scenario when estimating your source fund's remaining balance.
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