STP calculator: modelling a debt-to-equity transfer

What the STP calculator answers

A systematic transfer plan (STP) is the usual answer to "I have a lumpsum but do not want to put it all into equity on one day". The money waits in a liquid or debt fund, and a fixed amount moves into an equity fund every month. The STP calculator models both funds at once and, more usefully, puts a price on the staggering.

What an STP did in practice over four real start dates is in STP or lump sum? Four real tests. This post explains the calculator, which works with assumed returns rather than real ones, and what that difference means.

The four inputs

The source return is what the waiting money earns, typically a liquid, arbitrage or short-duration debt fund. The destination return is your assumption for the equity fund. Both are flat for the whole period.

The three results

• Transfer completes in: months if under a year, otherwise years to one decimal. If the transfer is smaller than the interest the source earns, the source never empties, and the card reads Never with a note that the source grows faster than you transfer out of it.
• Final corpus: the destination fund's value at the last transfer month, plus anything left in the source.
• vs lumpsum on day 1: the final corpus minus what the whole amount would be worth had it gone straight into the destination fund on the first day, measured on the same date.

Below them are a chart, Source and destination balance, and a table, Year-by-year: both funds, with Source left, Destination and Total columns.

A worked example with the defaults

₹12 lakh, ₹1 lakh a month, 6.5% on the source and 12% on the destination:

• Transfer completes in 1.1 years
• Final corpus ₹13.31L
• vs lumpsum on day 1 −₹34.33K

Why 1.1 years and not exactly one? Each month the calculator moves the transfer first, then grows both funds. The money still waiting earns 6.5% a year, so after twelve transfers of ₹1 lakh there is ₹37,266 left in the source. It moves in month 13. The table's Y1 row shows exactly that: ₹37.27K in the source, ₹12.81L in the destination. In all, ₹12.37 lakh is transferred out of a ₹12 lakh deposit.

The minus sign on the last card is not a fault in the plan. At a flat 12%, every month spent in a 6.5% fund is a month of lower return, so a lumpsum on day one ends at ₹13.66 lakh, ₹34,332 more.

How the transfer length changes the cost

Same ₹12 lakh and the same two returns, with a larger or smaller monthly transfer:

The longer the money waits, the more the plan gives up in a market that rises steadily. That is the price of the protection an STP buys.

The case the calculator cannot draw

An STP pays off when the market falls during the transfer, because the later instalments buy units more cheaply. A constant return cannot fall, so the calculator cannot show that directly. You can get close by setting the destination return low:

• Destination return 6.5%, equal to the source: vs lumpsum is +₹0. When both funds earn the same, timing does not matter.
• Destination return 0%: vs lumpsum is +₹37.27K. The STP wins by the interest the waiting money earned.

A real fall would be bigger than either case. That is why the real-data post linked above found an STP from January 2026 ahead of a lumpsum, and one from April 2025 behind it. Which outcome you get depends on the months you happen to transfer through, which no one knows in advance. Lump sum or SIP: how to decide argues that the choice is often about how you would react to a fall, not about the expected return.

What the calculator leaves out

1. Tax. Every transfer is a redemption from the source fund. If the source is a debt or liquid fund, the small gain in each transfer is taxed at your slab rate. The calculator ignores this.
2. Exit loads on either fund.
3. The same-fund-house rule. An STP runs between two schemes of one AMC. The calculator does not check that; your fund house's form will.
4. Uneven returns, as above.

Choosing the source fund

The source return is the one input you can look up instead of guess. A liquid fund or an arbitrage fund is where STP money usually waits; the cash-parking arbitrage screen lists arbitrage funds that returned more than 6% over the past year, and debt funds explained covers how the source side earns. SIP vs lumpsum sets out the trade-off an STP is built on, and the glossary entry for STP gives the definition.

To compare the plan with simply investing at once, try the STP calculator at your own amount, then read the vs-lumpsum figure as the cost of insurance against a fall. If that cost feels small next to the risk of entering at a peak, staggering may suit you. None of this is a recommendation for or against any fund.