STP Calculator

STP Calculator

How Does Policybazaar’s STP Calculator Work?

Systematic transfer plans are often used to turn stagnant investments made in debt or liquid assets into wealth-generating assets through equity funds. Policybazaar's STP calculator helps you estimate your future corpus by using the following information.

• Lumpsum investment in the source scheme: The total amount of money in your source fund.
• Periodic transfer amount: The amount you want to transfer from your source fund to your target fund periodically
• Frequency: The frequency of your investment
• Tenure of the STP investment: The time horizon of your investment.
• Rate of return: Enter your expected rate of return from the source scheme and the expected rate of return from the target scheme.

The calculator will use this information to estimate the future corpus that you will have accumulated in your target fund. Note that the amount calculated by the calculator is an estimate and does not represent the actual value of your corpus because it heavily depends on market performance.

Benefits of Using the STP Calculator

Policybazaar’s STP calculator can help you set up an STP that aligns with your future goals and risk tolerance. The benefits of the STP Calculator are:

• Risk mitigation: You can use the STP calculator to understand the nature of your investment through transfers. This can help you mitigate risk by developing an investing strategy through STP that will not only reduce risk but also help you earn considerable returns on your transfers in your target fund.
• Portfolio Rebalancing: This tool can also help you to rebalance your investing portfolio, for it can help you estimate the value of your transfers and your final corpus in your target fund against your source fund. You can thus use it to plan your STP strategy to rebalance your portfolio.
• Comparison Flexibility: You can instantly change the figures in the calculator to compare different transfer amounts at different return rates and investment years.

Key Considerations While Using an STP Calculator

An STP calculator is a digital tool that can help you while planning an STP setup, but it is also important to remember that you cannot entirely rely on an STP calculator to plan your investment. Below are some limitations of an STP calculator.

• Assumed rate of return: It is very important to remember that the rate of return for both the target and source fund is assumed and cannot remain constant. The rate keeps on fluctuating as per market performance. The calculator assumes a static rate of return to provide you with an estimated corpus.
• Scheme-based returns: It is also important to note that the returns heavily depend on the schemes you choose as your target and source fund. The NAV of these funds highly affect your final corpus.
• Type of STP plan chosen: Your corpus can also be affected by the type of plan you have chosen. Different asset management companies offer different types of STPs like regular STP, flex STP, Capital appreciation STP, and swing STP. Your choice among these plans can also highly change your final corpus.
• Does not consider taxes and exit loads: An STP calculator does not consider taxes and exit loads, which highly affect the final corpus of a person.

Conclusion

An STP calculator can be a key for you to manage your investment portfolio and redirect your stagnant investments to dynamic, return-generating funds. Unlike SIP, an STP does not need the investor to invest more than a pre-existing investment. This can overall aid an investor in fully optimising their assets and using them at their highest value.