₹1 Crore STP Investment Plan
3-Year Wealth Creation Strategy with 18-Month Systematic Transfer
Investment Strategy Overview
This plan uses a Systematic Transfer Plan (STP) approach to invest ₹1 crore over 3 years. The entire amount will initially be parked in a liquid/debt fund, then systematically transferred to equity funds over 18 months to average out market volatility and reduce timing risk.
Why This Strategy Works
✅ Rupee Cost Averaging
Buy more units when markets are down, fewer when high, averaging your purchase cost
✅ Reduced Volatility
Gradual transfer reduces impact of market timing and sudden corrections
✅ Earn While Waiting
Debt fund generates 6-7% returns while amount awaits transfer
✅ Disciplined Approach
Removes emotional decision-making and maintains systematic investing
Step 1: Initial Parking – Debt Fund Allocation
Recommended Debt Fund for STP
Park the entire ₹1 crore in a high-quality, low-risk debt fund that offers:
- High liquidity with no exit load
- Stable returns (6-7% annually)
- Low credit risk
- Easy STP facility to equity funds
| Fund Name | Category | Expected Return | Risk Level | Exit Load |
|---|---|---|---|---|
| Nippon India Small Cap Fund | Small Cap | ₹55,500 | ₹9,99,000 | 10% |
| TOTAL MONTHLY STP | ₹5,55,000 | ₹1,00,00,000 | 100% | |
Expected Returns & Risk Analysis
Return Projections (Conservative Estimates)
Investment: ₹1,00,00,000
Period: 3 years (after 18-month STP completion)
Value after 3 years: ₹1,40,49,280
Absolute Gain: ₹40,49,280
Scenario 2: Moderate (15% CAGR)
Value after 3 years: ₹1,52,08,750
Absolute Gain: ₹52,08,750
Scenario 3: Optimistic (18% CAGR)
Value after 3 years: ₹1,64,30,360
Absolute Gain: ₹64,30,360
Note: Actual returns will vary based on market conditions. Past performance is not indicative of future results.
Portfolio Risk Profile
This portfolio is designed for moderate to moderately aggressive investors with a 3+ year investment horizon. The 30% allocation to large-cap provides stability, while mid and small caps offer growth potential.
Implementation Timeline
Day 1-2: Account Setup
Complete KYC, open accounts with AMCs, link bank account
Day 3: Initial Investment
Invest ₹1 crore in ICICI Prudential Money Market Fund
Day 5-7: Set Up STP
Register STP of ₹5,55,000/month to the 5 equity funds with specified allocation
Month 1-18: Auto Transfer
STP executes automatically on the 7th of each month
Month 6, 12, 18: Review
Monitor performance, rebalance if any fund significantly underperforms
Month 24: Mid-term Review
Comprehensive portfolio review, consider rebalancing if needed
Month 36: Exit/Continue Decision
Evaluate returns, decide on redemption, continuation, or rebalancing
Tax Implications
- Equity Funds: Long-term capital gains (LTCG) above ₹1.25 lakh taxed at 12.5%. Short-term gains (STCG) taxed at 20%
- Debt Funds: Gains taxed as per your income tax slab rate
- STP Taxation: Each STP installment is treated as redemption from debt fund + purchase in equity fund
- Holding Period: For equity funds, >12 months = long-term. For debt funds, gains taxed at slab rate regardless of holding period
Tax Planning Tip: Since you’re holding for 3 years, most equity gains will qualify as LTCG. Plan redemptions strategically to stay within the ₹1.25 lakh tax-free limit each year if possible.
Key Advantages of This Strategy
📊 Rupee Cost Averaging
18-month STP ensures you buy at different market levels, averaging out volatility and reducing timing risk significantly
💰 Earn While You Wait
Debt fund generates 6-7% returns on undeployed capital, adding ₹3-4 lakhs to your corpus during STP period
🎯 Diversification
5 funds across 5 categories ensure optimal diversification reducing single fund/sector risk
⚖️ Risk Management
70% in large and flexi-cap funds provides stability; 30% in mid/small caps for growth potential
🤖 Discipline
Automatic STP removes emotional decision-making and ensures consistent investing regardless of market conditions
📈 Long-term Focus
3-year horizon allows equity investments to perform, historically showing positive returns over such periods
Monitoring & Rebalancing Strategy
Quarterly Review Checklist
- Check if STP is executing properly on scheduled dates
- Review individual fund performance vs. benchmark
- Monitor if any fund has significantly underperformed peers for 2+ consecutive quarters
- Check if portfolio allocation has drifted significantly (>5%) from target allocation
- Review overall portfolio value and returns
When to Rebalance
- If any category allocation drifts >10% from target (e.g., large cap becomes 40% instead of 30%)
- If a fund underperforms its category average by >5% for 3 consecutive quarters
- If fund manager changes in any of your funds
- Major changes in fund house or fund strategy
Exit Strategy (At 3 Years)
- Full Exit: If you need the money or have achieved your goal, redeem systematically over 3-6 months
- Partial Exit: Book profits from best performers, keep underperformers if fundamentals are strong
- Continue: If goals haven’t been met and market outlook is positive, continue for another 2-3 years
- Rebalance: Move gains from high-performing categories to undervalued ones
Alternative Strategies (If Market Conditions Change)
Strategy Modifications Based on Market Scenarios
If Markets Are at All-Time Highs:
- Extend STP period to 24 months instead of 18 months (₹4,16,667/month)
- Increase large cap allocation to 40%, reduce small cap to 5%
- Consider adding 10-15% allocation to balanced advantage or hybrid funds
If Market Crashes During STP Period:
- Accelerate STP—increase monthly transfer amount
- Consider lump sum transfer if crash is >20% from highs
- Increase mid and small cap allocation to capitalize on recovery
If You Need Liquidity Before 3 Years:
- First redeem from debt fund (if any balance remaining)
- Then redeem from large cap funds (most liquid, least volatile)
- Avoid redeeming mid/small caps during market downturns
- Consider loan against mutual funds instead of redemption
Expense Ratio & Other Costs
| Fund Type | Typical Expense Ratio | Annual Cost on Investment | Exit Load |
|---|---|---|---|
| Debt/Money Market | 0.20-0.30% | ₹20,000-30,000 | Nil |
| Large Cap Equity | 0.80-1.20% | ₹24,000-36,000 | 1% (if <1 year) |
| Flexi/Multi Cap | 0.90-1.50% | ₹35,850-59,625 | 1% (if <1 year) |
| Mid Cap | 1.00-1.80% | ₹19,980-35,964 | 1% (if <1 year) |
| Small Cap | 1.00-2.00% | ₹9,990-19,980 | 1% (if <1 year) |
Total Estimated Annual Expense: ₹1.10 – 1.80 lakhs (1.10-1.80% of corpus). This is already deducted from NAV, so you don’t pay separately.
Action Steps – Getting Started
Step 1: Complete KYC
If not already done, complete your KYC online through any AMC website or through a distributor. You’ll need: PAN card, Aadhaar, photo, bank proof, and signature.
Step 2: Choose Investment Method
Direct Plans (Recommended): Higher returns, no commissions. Invest through AMC websites or platforms like Kuvera, Groww, Zerodha Coin.
Regular Plans: Through distributor/advisor. Lower returns due to commissions but with advisory support.
Step 3: Make Initial Investment
Invest ₹1 crore in ICICI Prudential Money Market Fund (Direct Plan). Use NEFT/RTGS/Net Banking.
Step 4: Register STP
Fill STP form specifying: Source fund (ICICI Money Market), target funds (5 equity funds), amounts, frequency (monthly), date (7th), duration (18 months).
Step 5: Set Up Tracking
Create Excel sheet or use apps like MProfit, INDmoney to track all investments, STP dates, and returns.
Step 6: Automate & Forget
Once STP is set up, let it run automatically. Review quarterly but avoid checking daily—it creates unnecessary anxiety.
- Stay Invested: Don’t stop STP due to market volatility. That’s when rupee cost averaging works best!
- Avoid Timing: Don’t try to time the market. Systematic approach beats market timing
- Review, Don’t React: Review quarterly but don’t make changes based on short-term performance
- Maintain Liquidity: Keep 6 months emergency fund separate. Don’t invest money you’ll need within 3 years
- Tax Harvesting: In year 3, consider booking LTCG up to ₹1.25 lakh tax-free limit and reinvesting
- Document Everything: Keep records of all investments, STPs, statements for tax filing
⚠️ Important Disclaimers
This is NOT financial advice. I am NOT a SEBI-registered investment advisor. This plan is created for educational and illustrative purposes only.
Mutual fund investments are subject to market risks. Past performance is not indicative of future results. Returns mentioned are historical averages and not guaranteed.
Before investing:
- Consult a SEBI-registered investment advisor or certified financial planner
- Read all scheme-related documents carefully
- Understand your risk profile and investment objectives
- Verify current fund performance and expense ratios
- Understand tax implications based on your income bracket
- Fund recommendations may become outdated—verify current performance
Tax laws mentioned are current as of January 2026 and may change. Consult a tax advisor for your specific situation.
Market conditions change. This strategy should be adapted based on current market valuations and your personal circumstances.
The goal of this plan is to provide a structured framework for deploying ₹1 crore systematically. Actual implementation should be done after professional consultation and based on your unique financial situation, goals, and risk appetite.