STP Calculator

Are you planning to start a Systematic Transfer Plan (STP) in mutual funds, andwant to estimate the returns from an STP? Use our easy to use mutual fund STP calculator below. Just enter the lumpsum amount you wish to invest, the STP tenure, STP amount and the rate of return of the source liquid or debt mutual fund scheme and the equity mutual fund scheme. The calculator will calculate the STP returns instantly.

Particulars

Total Investible Amount

Please Enter Amount.

Tenure of STP

Please select. Please select.

Expected Growth (Equity)

Please Enter percentage. Enter 2 decimal .

Expected Growth (Liquid/Debt)

Please Enter percentage. Enter 2 decimal .

What is STP and how does it work?

Under a mutual fund Systematic Transfer Plan (STP), a lump sum amount you invested in one scheme can be transferred at regular intervals systematically in a piecemeal manner into another mutual fund scheme (as desired by you) of the same mutual fund house. Most fund houses have a daily, monthly, weekly, and quarterly option to transfer money. But not all offer the weekly option – only a handful of them do. Moreover, different fund houses have different requirements for the minimum amount invested through STP.

To gain the maximum benefit of a STP and market volatility, a lumpsum amount can be initially invested in an ultra-short term debt fund and/or a liquid fund. This amount can besystematically transferred –monthly or quarterly – to an equity-oriented fund of your choice (but ideally which can prove worthy for long-term wealth creation) over a period.

If you would prefer to stay invested in liquid funds today, but going forward you also want to take a gradual exposure towards equity (as you perceive them to do well), you can certainly opt for the STP option offered by mutual funds. Likewise, if you expect the markets to undergo a corrective phase, and thus as a smart move you prefer gradually disinvesting from equity mutual funds, then you can opt for an STP from your equity fund and transfer into a liquid fund

Also, while you plan some of your important financial goals such as buying your dream home, getting married, children’s education, their marriage, your retirement, etc.; STP can be of great utility because it can help you to shift gradually from equity to debt as you are near to your financial goals. 

But while you opt for an STP, for benefits it offers, you also got to be cognisant about the cost and tax implications.

Benefits of STP

We all know that mutual funds are the most efficient way to take exposure to the equity markets. In today’s market scenario, while one may aim to take advantage of both equity and debt markets, there is an inherent risk involved. Thus, when taking exposure to these respective asset classes, it is important to adopt a cautious approach, and proceed smartly and prudently.

The STP facility is best suited for investors who seek stable returns with some exposure to equity funds with an objective of wealth creation. Debt funds are ideal for capital protection and equity funds are suitable for investors looking for capital growth. Hence, a blend of different types of funds always helps to strike the balance between both asset classes.

Very often while reallocating assets within categories of mutual fund schemes, investors tend to give redemption request forms, and then invest into another mutual fund scheme as they deem fit. However, one can use an STP to transfer the money systematically in such cases. A STP can work as an alternative to SIP as well if you have a substantial amount lying in your savings account. The debt scheme you choose has the potential to earn a higher return that your bank savings account.

Here are some additional benefits of STP -

  1. Power of Compounding
  2. Tactical asset allocation and rebalancing
  3. Help in financial planning
  4. Rupee-cost averaging 

What are the different types of STPs available?

There are broadly 3 types of STP options

  • Fixed STP – Under this, the amount to be transferred via the STP is fixed (predetermined at the time of investment). The specified amount is transferred to the desired (i.e. target) mutual fund scheme. 

  • Capital Appreciation or Profit generated – Under this STP option, the capital appreciation or the profit generated on you’re the invested amount is transferred to the targetscheme , leaving the principal intact. Hence, this option works well if one intends to book regular profits and plough them into debt mutual fund schemes from the same fund house. 

  • Flexi or Variable STP – Under Flexi STP you have a choice to transfer variable amount. The minimum amount under this STP option is fixed, but subject to volatility in the market the variable amount is decided. If the NAV of the target fund falls, investment can be increased to take benefit of falling prices and likewise if the market moves up, the minimum amount of transfer is invested to take advantage of increasing prices. Transfer facility is available on a daily, weekly, monthly and quarterly interval. 


 

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