Park the windfall in a debt or liquid fund. Transfer a fixed amount monthly into equity. You earn arbitrage-like returns on the un-transferred sleeve while averaging into equity over 2-4 years.
A bigger monthly transfer empties the source faster but loads equity in quicker. The right slope depends on your market-timing tolerance.
| Monthly ↓ / Years → | 1Y | 2Y | 3Y | 4Y | 5Y |
|---|---|---|---|---|---|
| ₹5,000 | ₹10.74 L | ₹11.56 L | ₹12.49 L | ₹13.52 L | ₹14.68 L |
| ₹15,000 | ₹10.77 L | ₹11.69 L | ₹12.80 L | ₹14.12 L | ₹15.69 L |
| ₹25,000 | ₹10.80 L | ₹11.82 L | ₹13.12 L | ₹14.72 L | ₹16.59 L |
| ₹35,000 | ₹10.82 L | ₹11.95 L | ₹13.42 L | ₹15.12 L | ₹17.04 L |
| ₹45,000 | ₹10.85 L | ₹12.08 L | ₹13.61 L | ₹15.34 L | ₹17.28 L |
The bull-case for STP is behavioural — you don't fully deploy at the top, and the un-transferred sleeve earns 7% in liquid while you average in. Quantitatively, in trending bull markets, lumpsum at day 1 wins ~70% of the time. But in flat or sideways markets STP wins, and it's the only honest play for cohorts who would otherwise panic-redeem after a 20% drawdown.
Tax treatment matters: each STP outflow from the source fund is a partial redemption. Liquid funds are debt funds — slab-rate taxed on gain since 1 Apr 2023 (no indexation, no LTCG break). Arbitrage funds are taxed as equity (12.5% LTCG above ₹1.25 L) — usually the more tax-efficient parking sleeve.
Same AMC requirement: STP is operationally available only within the same fund house. Cross-AMC STP requires manual redemption + fresh purchase, with the associated NAV-cutoff and tax implications.
What this doesn't model: exit load on the source fund (typically 0.25-1% if redeemed within 7-90 days, depending on category), STT, NAV cutoff time gaps, stamp duty (0.005% on each leg).
Further reading: Equity Savings vs Arbitrage — picking the source fund.
Calculators on this site use the inputs you provide and the assumptions disclosed in their methodology. Returns are not promised or guaranteed. MintByte is an AMFI-registered mutual fund distributor (ARN-314872). MintByte does not issue buy/sell recommendations on specific securities — the site is an educational data and analytics platform. Not investment advice. Methodology · How we earn.