STP vs SIP Calculator
If you already have a lump sum and want to invest it into equity gradually, you essentially have two choices: run a Systematic Transfer Plan (STP), where the money stays parked in a fund and is transferred to equity in installments, or simply hold the remaining cash aside and invest the same monthly amount directly through a SIP. Our STP vs SIP Calculator compares both approaches using the same total amount, monthly investment, and time period, so you can see which one puts your money to better use.
Enter your total investment amount, the monthly transfer/SIP amount, the source fund’s expected return (used for the STP’s parked money), the target fund’s expected return (used for the equity investment in both cases), and your time period. The calculator then shows the source fund balance, target fund value, and total value for both the STP and SIP routes side by side.
STP vs SIP Calculator Formula
Both routes send the same monthly amount into the same target fund, so the target fund growth uses the standard SIP future value formula in both cases:
Target Fund Value = P × [ ( (1 + i)^n − 1 ) / i ] × (1 + i)
Where P is the monthly transfer/SIP amount, i is the target fund’s monthly rate of return, and n is the total number of months. Since this part is identical for both options, the real difference comes from what happens to the money that hasn’t been invested yet:
- STP: The un-transferred amount stays in the source fund and keeps earning the source fund’s expected return every month until it’s transferred out.
- SIP: The un-invested amount is assumed to sit idle — for example in a regular savings account — earning no meaningful return.
The Total Value for each option is simply the Target Fund Value plus whatever remains of the original lump sum (growing in the case of STP, static in the case of SIP).
Example Calculation
Suppose you have ₹5,00,000 and plan to move ₹10,000 a month into an equity fund over 3 years, comparing an STP (source fund earning 6% p.a.) against a plain SIP where the rest of the money sits idle. Assume the target equity fund is expected to return 12% p.a. in both cases.
- Total Investment: ₹5,00,000
- Monthly Transfer / SIP Amount: ₹10,000
- Source Fund Return (STP only): 6% p.a. | Target Fund Return: 12% p.a.
- Time Period: 3 years (36 months)
| Metric | STP | SIP |
|---|---|---|
| Remaining/Idle Balance | ₹2,03,012 | ₹1,40,000 |
| Target Fund Value | ₹4,35,076 | ₹4,35,076 |
| Total Value | ₹6,38,088 | ₹5,75,076 |
Notice that the Target Fund Value is identical in both cases — ₹4,35,076 — because the same monthly amount goes into the same fund at the same rate either way. The entire ₹63,012 difference in total value comes from the remaining balance: the STP’s source fund keeps earning 6% p.a. on the un-transferred money, while the plain SIP route leaves that same money idle, earning nothing. This isolates exactly what an STP adds over a plain SIP when you already have a lump sum sitting around.
FAQs about STP vs SIP Calculator
What is the real difference between STP and SIP?
Both involve investing a fixed amount every month into a fund, and the growth of that invested amount is calculated the same way in each. The key difference is what happens to the rest of your money while it waits to be invested: in an STP it stays invested in a source fund and keeps earning returns, while in a plain SIP scenario (where you already have a lump sum sitting aside) that money typically sits idle.
If I don’t have a lump sum, does this comparison still apply?
Not really. This comparison specifically addresses the situation where you already have a lump sum and are deciding how to deploy it into equity gradually. If your monthly SIP money comes from ongoing income rather than an existing lump sum, there’s no idle cash to compare against, and a standard SIP is simply the way you’re investing fresh savings.
Is STP always better than SIP for a lump sum?
Based on this comparison, yes — as long as the source fund earns a positive return, STP will always produce a total value equal to or higher than a plain SIP with the rest of the money sitting idle, since it puts the entire lump sum to work rather than leaving part of it unused.
Does the target fund’s return rate affect which option wins?
No. Since both options invest the same monthly amount into the same target fund at the same assumed rate, the target fund value is identical either way. The winner is determined entirely by the source fund’s return rate versus the assumed 0% on idle SIP money.
What if I would otherwise put the idle SIP money in a savings account earning some interest?
This calculator assumes the un-invested SIP portion earns no return, to represent the common case of holding cash aside without actively investing it. If you would instead park that money in an interest-bearing savings account or FD, the actual gap between STP and SIP would be smaller than shown here — you can approximate this by using the SWP vs FD or Lumpsum calculator to estimate that portion separately.
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