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DD Sharma of MF King says that investors easily get options for investing in installments in mutual funds, but the way of lump sum investment is very less. In such a situation, investors can take the route of Booster Systematic Transfer Plan (STP). This is such a solution of mutual funds, where you keep your money in lump sum and later this money is invested in the stock markets in installments.
The returns in this scheme are also good as compared to the normal STP. Also, you get rid of the installment amount every month. Although the investment will be in installments only, but this work is done by the fund manager. There are many investors who want to invest in lump sum. But the problem for them is that they do not know about such means.
8.29 per cent higher returns than normal STP
If we talk about the Booster STP of ICICI Prudential, then someone would have invested Rs 12 lakh in ICICI Prudential in July, 2021, then this amount has now become Rs 12.13 lakh. Whereas the same amount has come down to Rs 11.20 lakh in normal STP.
On this basis, Booster STP has given an advantage of 8.29 percent as compared to normal STP. If you would have invested Rs 12 lakh in Booster STP in December 2018, it would have given a return of 19.6 per cent by May 2022, that is, the investment increased to Rs 22.14 lakh. While the return of normal STP stood at 12.5 per cent. 12 lakh was invested only Rs 17.93 lakh.
What is Booster STP and how does it work?
STP stands for Systematic Transfer Plan. When it comes to booster it does a better job than normal STP. It is not that it should invest only in downtrends. However, when the market is cheap, it invests more in it and when it is expensive, it reduces the investment. With this, investors are expected to get good returns.
How it decides the investment
Booster STP invests in installments ranging from 0.1 times to 5 times of your principal amount, depending on the valuation index of the equity. Statistics show that when the sub-prime market was in a downtrend in the year 2008, even during the European crisis and Kovid, when there was a huge decline in the market, then it invested more in the stock.
investment as market
Booster STP invests the same in installments depending on the market conditions. For example, if you would have invested Rs 12 lakh in this scheme in January 2019, then it has invested this amount in the market till August 2020 at different times. Sometimes it has invested Rs 50,000, sometimes it has invested Rs 10 thousand and sometimes it has invested up to Rs 2.84 lakh. This shows that it fully understands the market and focuses on investing your money.
Right choice for lump sum investment
Sometimes for some reason people get lump sum money. It can be a bonus, or you can get some money as a gift. Or also get money from selling an investment. In such a situation, it is a better option to invest them in the right place from where your money is further invested in the stock market. Archana Pandey, Investment Advisor.
Booster STP Compound Return in Nifty
Index Normal STP Booster STP
Nifty 50 9.8 11.9
Nifty 500 10.1 12.5
Nifty Smallcap 9.8 12.9
Nifty Midcap150 12.4 15.5
(This return has been worked out on the basis of 5 years data.)
Better profit in every index of Nifty
In the Nifty 50 index, if we talk about the booster STP of ICICI Prudential, it gave a CAGR of 11.9 percent while the return of the normal STP was 9.8 percent. In Nifty 500 Index, the return of Booster is 12.5 and the return of Normal is 10.1, in Nifty Smallcap Booster is 12.9 and 9.8 in General and in Nifty Midcap 150, the return of Booster is 15.5 and the return of Normal STP is 12.4 percent.