STP Calculator

Reasons to invest through STP

• Rupee-cost averaging

  By investing a fixed amount at regular intervals, you purchase more units when markets are down and fewer units when prices are high. Over time, this can reduce the per-unit cost of your investment and potentially reduce the impact of volatility.

• Discipline and consistency

  STPs require a disciplined investment approach as you invest a fixed amount at a regular frequency, regardless of market conditions. This can save you the trouble of timing the market. Moreover, it encourages a long-term view towards investing.

• Gradual exposure to equity

  An STP allows you to gradually increase your exposure to equity without needing to time the market or invest all your money at one go. Moreover, the money invested in the debt fund continues to potentially earn more interest than it would if it were lying idle in a savings account. Please note, however, that interest rates in savings bank account are fixed. However, returns in mutual funds are not guaranteed and are subject to market risk.

What is the difference between STP & SIP?

SIP and STP are both ways to invest in instalments in mutual funds, but they work differently. One is about disciplined investing, while the other helps with strategic fund transfers.

SIP (Systematic Investment Plan): This is a method where you invest a fixed amount in a mutual fund at regular intervals—daily, weekly, monthly, quarterly. It can help investors build wealth over time, without worrying about market timing.

STP (Systematic Transfer Plan): Here, you shift a fixed amount from one mutual fund to another—typically from a debt fund to an equity fund. This method is beneficial if you don’t want to exposure your entire capital to the equity market at one go. By transferring it in parts, you reduce the risk of entering the market at the wrong time. At the same time, your money does not stay idle in your bank account – it gets some potential to earn returns in the debt fund. Some investors also use STPs to move from equity to debt funds as they approach their financial goals. Once again, the intention is to stagger to the investment to balance risk and return potential.