Systematic Transfer Plan (STP) Calculator
Planning to invest a lump sum in the stock market but worried about timing it wrong? A Systematic Transfer Plan is the smart solution you’re looking for. Our easy-to-use Systematic Transfer Plan Calculator helps you visualize your investment growth and make informed decisions.
Enter your investment details below to calculate the potential returns from your Systematic Transfer Plan strategy. This powerful tool takes the guesswork out of your financial planning, showing you how your money can grow by systematically moving from a safer fund to a growth-oriented one.
How to Use the Allsums STP Calculator?
Our Systematic Transfer Plan Calculator is designed for simplicity and accuracy. Follow these steps to estimate your returns:
Total Investment (Lump Sum): Enter the total amount you wish to invest initially. This money will be invested in a low-risk “source fund” (such as a debt or liquid fund).
Amount to Transfer (Per Installment): Input the fixed amount you want to transfer periodically to the “destination fund” (usually an equity fund).
Duration : Enter the duration in months
Expected Rate of Return (Source Fund% ): Enter the estimated annual return rate for your source fund (e.g., a debt fund might yield 6-7%).
Expected Rate of Return (Destination Fund% ): Input the estimated annual return rate for your destination fund (e.g., an equity fund might average 12-15% over the long term).
Once you fill in the details, our STP return calculator will instantly show you the total value of your investment, the amount invested, and the potential gains.
What is a STP?
A Systematic Transfer Plan is an investment strategy offered by mutual fund houses. It allows an investor to periodically transfer a specific amount from one mutual fund scheme (the source fund) to another (the destination fund) within the same fund house.
STP Full Form: Systematic Transfer Plan
Typically, investors park a lump sum amount in a low-risk debt or liquid fund (the source fund). Then, a pre-determined amount is automatically transferred at regular intervals (daily, weekly, monthly) into a higher-risk equity fund (the destination fund). This method helps to average out the purchase cost and mitigate the risk of market volatility.
Key Benefits of a Systematic Transfer Plan
An STP investment is more than just a transfer; it’s a strategic approach to wealth creation. Here are its main advantages:
1. Rupee Cost Averaging
Just like a SIP, an STP helps you benefit from rupee cost averaging. By investing a fixed amount regularly, you buy more units when the market is low and fewer units when it is high. This averages out your purchase cost over time, reducing the impact of market volatility.
2. Mitigates Market Timing Risk
Investing a large lump sum at once can be risky if the market is at its peak. An STP staggers your investment into an equity fund over time, protecting you from a potential downturn right after you invest.
3. Potential for Dual Returns
While your money is being systematically transferred, the idle amount in your source (debt) fund continues to earn returns. At the same time, the amount transferred to the destination (equity) fund starts growing based on market performance. This dual-engine approach can enhance your overall returns.
4. Disciplined and Automated Investing
STP automates the investment process, instilling a sense of discipline. You set the plan once, and the transfers happen automatically, ensuring you stay on track with your financial goals without being swayed by market sentiment.
STP vs. SIP vs. Lumpsum: What's the Difference?
Understanding where the Systematic Transfer Plan fits is crucial. Here’s a clear comparison:
| Feature | Systematic Transfer Plan (STP) | Systematic Investment Plan (SIP) | Lumpsum Investment |
| Source of Funds | An existing mutual fund investment (lump sum). | Your bank account. | Your bank account. |
| Initial Capital | Requires a significant lump sum to start. | Requires small, regular investments. | Requires a single, large investment. |
| How it Works | Transfers a fixed sum from a source fund to a destination fund. | Debits a fixed sum from a bank account to invest in a fund. | Invests the entire capital in a fund at one time. |
| Best For | Investors with a lump sum who want to enter equity markets cautiously. | Salaried individuals or those with a regular income stream. | Investors who understand market cycles and have a high-risk appetite. |
| Primary Benefit | Rupee cost averaging + returns from the source fund. | Rupee cost averaging and disciplined saving. | Potential for high returns if timed correctly. |
Frequently Asked Questions (FAQs)
Who should opt for an STP?
A Systematic Transfer Plan is ideal for:
Investors who have received a large sum of money (e.g., a bonus, an inheritance, or a property sale).
Risk-averse investors who want to gain exposure to equity markets gradually.
Anyone looking to rebalance their portfolio from debt to equity in a disciplined manner.
What are the tax implications of an Systematic Transfer Plan?
Each transfer from the source fund to the destination fund is treated as a “redemption” from the source fund and a “purchase” in the destination fund. Therefore, capital gains tax may apply on the gains made in the source fund at the time of each transfer. Contact us for any consulting.
Check out our Service page for any service requirements
Can I stop an Systematic Transfer Plan midway?
Yes, you can stop your Systematic Transfer Plan at any time by submitting a request to the mutual fund house. You can also choose to redeem the entire amount from both funds if you wish.
What is the difference between a source fund and a destination fund?
Source Fund: The scheme from which money is transferred. It is typically a low-risk fund, such as a liquid, ultra-short-term, or debt fund.
Destination Fund: The scheme to which money is transferred. It is typically a higher-risk, growth-oriented fund, such as an equity or hybrid fund.
Is Systematic Transfer Plan better than a lump sum investment?
It depends on your risk appetite and market conditions. A Systematic Transfer Plan is generally considered safer as it averages out your investment and protects you from market volatility. A lump sum can yield higher returns if you invest when the market is low, but it also carries a higher risk. Our Systematic Transfer Plan Calculator can help you compare potential outcomes.
Check out the Lumpsum Calculator
Discover the exciting opportunities available with the latest Systematic Transfer Plan-eligible mutual funds in India by clicking on the link below. Empower your investment journey today!.
How to Use the Allsums Systematic Transfer Plan Calculator
The Systematic Transfer Plan Calculator estimates the future value of your Systematic Transfer Plan investments. Whether you invest a lump sum in equity funds or transfer funds systematically, this calculator simplifies the process and offers actionable insights.
Follow these steps to use the Calculator:
Step 1: Enter Initial Lump Sum Investment (₹). Start by inputting the total amount you plan to invest in the source fund, usually a liquid or debt fund. The initial corpus will fund the transfers. Example: ₹500,000
Step 2: Set the Systematic Transfer Plan Amount (₹). Define the fixed amount you want to transfer regularly from the source fund to the target fund. The system transfers this amount at each interval. Example: ₹10,000 per month
Step 3: Choose Transfer Frequency. Select how often transfers occur. Options include:
- Monthly
- Quarterly
- Half-Yearly
- Yearly: The chosen frequency determines how often money moves from the source fund to the target fund.
Step 4: Enter the Duration of Systematic Transfer Plan (Years or Months). Specify the duration for which the Systematic Transfer Plan will run. Enter the duration in years or months, depending on the frequency selected. Example: 3 years or 36 months
Step 5: Input Expected Returns
- Source Fund Return (% p.a.) – Enter the expected annual return from the source fund (e.g., a liquid or debt fund)—typical range: 5% to 7%.
- Target Fund Return (% p.a.) – Input the expected annual return from the target fund (e.g., an equity fund)—typical range: 9% to 12%.
These returns help calculate the growth of both the remaining amount in the source fund and the invested amount in the target fund.
Step 6: Calculate Your Systematic Transfer Plan . Click the “Calculate STP” button to generate results and analyze the projected growth of your investments.