STP calculator: stagger a lump sum into equity and see what it costs or saves
A systematic transfer plan (STP) parks a lump sum in a low-risk fund — usually a liquid, overnight or arbitrage fund — and switches a fixed amount every month or quarter into an equity fund of the same fund house. This STP calculator follows both funds month by month: the money waiting in the source fund, the units building up in the target fund, and the total.
It then puts the STP next to the two obvious alternatives: investing the whole lump sum on day one, and leaving it in a savings account while running a SIP of the same size. Because every transfer is a redemption, it also works out the capital-gains tax on each switch-out, for debt or equity-oriented source funds.
All three routes use constant returns you choose, so the comparison shows the cost of waiting rather than the benefit of avoiding a crash. Results are estimates, not investment or tax advice.
How to use the STP Calculator
- Enter the Lump sum to invest and the amount to transfer every month or quarter.
- Set the Source fund return (liquid or arbitrage fund), the Target fund return (equity fund) and, for the SIP comparison, your savings account rate.
- Choose how many years to compare over — at least as long as the transfers last.
- Pick the source fund type and your slab rate for the tax on each switch-out.
- Compare the three bars, read the month-by-month table and download it as CSV.
STP Calculator features
Two return assumptions
Separate rates for the fund the money waits in and the fund it moves to.
Three-way comparison
STP against a day-one lump sum and against a SIP paid from a savings account, before and after tax.
Realistic last transfer
The final instalment sweeps whatever is left in the source fund, interest included.
Tax on every switch-out
Slab rate for liquid and debt funds; 20% short-term or 12.5% long-term above ₹1.25 lakh for arbitrage funds.
Month-by-month table
Transfers, gains, both fund values and all three routes for every month, ready for a spreadsheet.
How the STP calculator works
Each annual return is turned into its monthly equivalent, i = (1 + r)1/12 − 1. The lump sum goes into the source fund on day one and the first transfer happens straight away; after that a transfer goes out every month or quarter. The number of transfers is the lump sum divided by the transfer amount, rounded up, and the last one moves everything that is left.
The source fund’s units are all bought on day one, so each switch-out’s gain is transfer × (1 − 1 ÷ (1 + isource)months held). The target fund simply compounds each transfer from the month it arrives.
Worked example: ₹12 lakh over a year
With the opening figures — ₹12,00,000 moved at ₹1,00,000 a month from a liquid fund earning 6.5% into an equity fund assumed to earn 12%, compared over 5 years — the source fund earns ₹35,967 while it waits, so the twelfth transfer sweeps ₹1,35,967. At a 30% slab the tax on those switch-outs is ₹11,222 with cess.
After five years the STP is worth ₹20,65,965. Investing everything on day one would reach ₹21,14,810, because at a steady 12% every month out of the market costs growth. A SIP from a 3% savings account reaches ₹20,35,118, and after tax the STP is ₹24,789 ahead of it — the reward for parking the money somewhere better than a savings account.
STP, lump sum or SIP?
- Lump sum wins whenever the equity fund rises steadily, which is why it comes out ahead at constant returns. Check it with the lumpsum calculator.
- STP spreads your entry over several prices. If the market falls during the transfer months, later instalments buy cheaper units, which a constant-return model cannot show. It suits money you already have, such as a bonus or maturity proceeds.
- SIP is for money you earn month by month. Running one from a savings account while a lump sum sits idle is the weakest of the three — compare monthly plans with the SIP calculator.
- Once a corpus is built, the reverse move — regular withdrawals — is covered by the SWP calculator.
How STP switch-outs are taxed
A short STP from a liquid fund produces small gains, so the tax is usually modest; the target fund is taxed only when you eventually sell it.
| Source fund | Gains on each transfer | Why |
|---|---|---|
| Liquid, overnight or debt fund | Your slab rate | Specified debt funds are taxed at slab rates however long you hold them |
| Arbitrage or other equity-oriented fund | 20% if held up to 12 months; 12.5% above ₹1.25 lakh after that | Taxed like equity funds |
STP Calculator FAQ
What is an STP and how does an STP calculator work?
An STP moves a fixed amount from one mutual fund to another at regular intervals. The STP calculator grows the money left in the source fund and every instalment in the target fund at the returns you enter, then compares the result with a lump sum and a SIP.
Is STP better than a lump sum?
Not at constant returns — investing on day one gives the target fund more time to grow. An STP reduces the risk of investing everything just before a fall, so it trades some expected return for a smoother entry.
What is the difference between STP and SIP?
A SIP takes money from your bank account each month; an STP takes it from another mutual fund where your lump sum is already invested and earning more than a savings account.
How is tax calculated on an STP?
Every transfer is a redemption from the source fund. Gains from liquid and debt funds are taxed at your slab rate; from arbitrage funds at 20% if held up to a year. The calculator adds the tax for each plan year.
How long should an STP run?
Six to twelve months is common for equity funds, but there is no fixed rule. Longer STPs spread the entry more widely and leave money out of equity for longer.
Which fund should be the source of an STP?
Usually a liquid or overnight fund for safety, or an arbitrage fund for equity taxation. It must be with the same fund house as the target fund.