Move money from a debt fund into an equity fund on a schedule. See both balances, the exit load on every transfer, and what a lump sum would have done instead.
Does an STP earn more than a lump sum?
Not at a constant return, and not on average. Money still sitting in the source fund is earning the lower rate, so the longer the transfer runs the further behind it finishes. An STP is bought for a different reason: it stops you putting your whole corpus in the day before a fall.
How long should an STP run?
Long enough to matter and short enough not to waste the money. Six months to two years is the common range. Beyond about three years most of the corpus has spent most of its life in the low-return fund, which defeats the purpose.
Is an STP taxed?
Yes, on every transfer. Each one is a redemption from the source fund. A debt fund is taxed at your slab rate on the gain, and an equity fund follows the short and long term capital gains rules. The tax is small on each transfer but it happens every month.
What about the exit load?
A liquid fund usually has none after seven days, which is why liquid and ultra short funds are the normal source. If you start an STP out of an equity fund inside its load period, you pay the load on every single transfer, and this calculator adds them all up.
What if the source fund runs out early?
The last transfer is whatever is left, and the plan stops. That happens when the transfer amount is larger than the corpus divided by the number of periods, which is easy to do by accident. The calculator shows when the source empties.