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Finance Calc Kit
Investments

STP Calculator

Calculate your Systematic Transfer Plan (STP) returns with our free online STP calculator. Estimate transfers and growth from one fund to another.

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Final portfolio value

$732,179.02

After 5 years of monthly STP transfers

Source fund balance

$323,830.67

44.2% of final value

Target fund balance

$408,348.35

55.8% of final value

Total transferred

$300,000.00

60.0% of starting corpus moved

Total gains

$232,179.02

+46.4% overall return

Final portfolio composition

  • Source fund balance$323,830.6744.2%
  • Target fund balance$408,348.3555.8%

Calculation details

Monthly simulation from source fund to target fund with separate return rates.

  1. Convert annual returns to monthly periodic rates

    rs=Rs12×100=612×100=0.500000%r_s = \frac{R_s}{12 \times 100} = \frac{6}{12 \times 100} = 0.500000\%

    Source fund compounds at 6.0% annually (0.5000% per month). Target fund compounds at 12.0% annually (1.0000% per month).

  2. Transfer fixed amount each month

    Transferm=min⁡(Pmonthly,Source Balancem−1)\text{Transfer}_m = \min(P_{\text{monthly}}, \text{Source Balance}_{m-1})

    Each month, $5,000.00 moves from the source fund to the target fund, capped by whatever remains in the source fund.

  3. Compound both balances after each transfer

    Sourcem=(Sourcem−1−Transferm)×(1+rs)\text{Source}_m = (\text{Source}_{m-1} - \text{Transfer}_m) \times (1 + r_s)

    The source fund earns returns on its remaining balance while waiting to be transferred.

  4. Grow target fund with transfers plus returns

    Targetm=Targetm−1×(1+rt)+Transferm\text{Target}_m = \text{Target}_{m-1} \times (1 + r_t) + \text{Transfer}_m

    After 5 years (60 months), the combined portfolio reaches $732,179.02 with $232,179.02 in total gains (46.4% overall return).

Year-by-year STP schedule

Source and target fund balances after each year of transfers and compounding.

YearTransferredSource balanceTarget balanceTotal value
1$60,000.00$468,853.00$63,413.00$532,265.00
2$60,000.00$435,784.00$134,867.00$570,652.00
3$60,000.00$400,676.00$215,384.00$616,061.00
4$60,000.00$363,403.00$306,113.00$669,516.00
5$60,000.00$323,831.00$408,348.00$732,179.00
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How systematic transfer plans bridge debt and equity

A Systematic Transfer Plan (STP) is a mutual fund facility that moves a fixed amount at regular intervals from one scheme (the source fund, often a liquid or debt fund) to another scheme (the target fund, often an equity fund) within the same asset management company. Instead of deploying a large lump sum into equities all at once, STP staggers the entry while the un-transferred balance continues earning returns in the lower-risk source fund.

This STP calculator projects how your corpus splits between source and target funds over time, given separate expected return rates for each. If you are adding fresh money each month rather than transferring from an existing fund, use the SIP calculator. To model withdrawals from an accumulated corpus, try the SWP calculator. For a one-time deposit without transfers, see the lumpsum calculator. For mutual fund SIP or lump sum projections, use the mutual fund calculator.

STP vs SIP: what is the difference?

A Systematic Investment Plan (SIP) invests new cash from your bank account into a fund at fixed intervals. An STP transfers money that is already invested in a source fund into a target fund. The parked balance in the source fund earns returns while waiting to move, which is the key advantage over simply holding cash between equity purchases. Each STP transfer is treated as a redemption from the source scheme and a fresh purchase in the target scheme, which may trigger exit loads and capital gains tax depending on holding period and fund type.

Monthly STP simulation formula

Because STP involves two compounding balances and periodic transfers, there is no single closed-form equation. The standard approach is a month-by-month simulation. For each month mm from 1 to nn:

Transferm=min⁡(P,  Sm−1)\text{Transfer}_m = \min(P,\; S_{m-1})
Sm=(Sm−1−Transferm)×(1+rs)S_m = (S_{m-1} - \text{Transfer}_m) \times (1 + r_s)
Tm=Tm−1×(1+rt)+TransfermT_m = T_{m-1} \times (1 + r_t) + \text{Transfer}_m

Where PP is the fixed monthly transfer amount, SmS_m is the source fund balance, TmT_m is the target fund balance, rs=Rs/(12×100)r_s = R_s / (12 \times 100) is the monthly source return, and rt=Rt/(12×100)r_t = R_t / (12 \times 100) is the monthly target return. The final portfolio value is Sn+TnS_n + T_n.

Step-by-step worked example

Suppose you park $500,000 in a liquid fund (source) and transfer $5,000 per month into an equity fund (target) for 5 years. Assume 6% annual return on the source fund and 12% on the target fund.

  1. Convert annual rates to monthly: source rs=6%/12=0.5%r_s = 6\% / 12 = 0.5\%, target rt=12%/12=1.0%r_t = 12\% / 12 = 1.0\%.
  2. Month 1: transfer $5,000 from source ($495,000 remains), source grows to $497,475, target starts at $5,000.
  3. Repeat for 60 months. When the source balance is less than $5,000, only the remaining balance transfers.
  4. After 5 years: source balance about $323,831, target balance about $408,348, total portfolio about $732,179. Total transferred: $300,000. Total gains: about $232,179 (46.4% on the original $500,000).

The remaining $200,000 stays in the source fund because $5,000/month for 60 months only moves $300,000. That idle balance continues compounding at the lower debt rate, which is why STP duration and transfer amount must be planned together.

When to use an STP strategy

  • Lump sum deployment: You received a bonus, inheritance, or property sale proceeds and want gradual equity exposure without market timing risk.
  • Portfolio rebalancing: Shift from an overweight debt allocation toward equities over several months rather than in one trade.
  • Post lock-in transfers: Move matured ELSS or other locked-in units systematically into a different scheme.
  • Rupee cost averaging effect: Like dollar-cost averaging, staggered transfers buy more target-fund units when prices dip and fewer when prices rise. Compare scenarios with the dollar-cost averaging calculator.

Practical planning tips

Match your monthly transfer and duration so total planned transfers align with how much you want in the target fund. If you plan to move the entire corpus, set monthly transfer times months equal to your starting amount (for example, $500,000 over 100 months at $5,000/month). Consider exit loads on the source fund and short-term capital gains tax on each redemption. STP is available only between schemes of the same fund house. For broader portfolio modeling with inflation and multiple asset classes, use the investment calculator.

Frequently asked questions

What is the difference between STP and SIP?
SIP invests fresh money from your bank into a fund at regular intervals. STP moves money already invested in a source fund into a target fund. With STP, the un-transferred balance earns returns in the source fund while waiting.
When should I use an STP?
STP is ideal when you have a large lump sum parked in a debt or liquid fund and want to gradually shift into equities without investing everything at a single market level. It also helps with systematic rebalancing between asset classes.
What are typical source and target funds for STP?
The source fund is usually a liquid fund, ultra-short duration fund, or money market fund with lower volatility. The target fund is typically a diversified equity fund, index fund, or hybrid fund with higher growth potential.
What happens if the monthly transfer exceeds the source balance?
The transfer is capped at whatever remains in the source fund. Once the source is depleted, no further transfers occur, but both balances continue earning their respective returns until the end of the simulation period.
Are STP transfers taxable?
Each transfer from the source fund is treated as a redemption and may attract capital gains tax and exit load depending on the fund type and holding period. Consult a tax advisor for your specific situation.
Can I run an STP across different fund houses?
No. STP is an intra-AMC facility. To move money between different asset management companies, you must redeem from the source AMC and purchase in the target AMC as separate transactions.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.