Booster STP: Booster STP of mutual funds is a great option to invest lump sum money in the stock market. In this money is invested according to the movement of the market.
Booster STP: A basic principle of the stock market is to sell expensive, buy cheap. In such a situation, if you have lump sum money and the market is at a very high level, that is, there is a possibility of a fall in it, then it would not be considered wise to invest it in the stock market. In such a situation, boosters can take the route of STP, in which your money is invested in the stock market in installments. When the market is bullish, less money will be invested in the stock market and when the market is down, more money will be invested in the shares.
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How Booster STP Works
Booster STP is such a method of mutual funds under which investors keep a lump sum amount under a scheme and then choose one of the schemes in which this money is invested in installments at fixed intervals. It invests according to the market conditions. For example, if you have invested 10 lakh rupees, then according to the movement of the market, only 10 thousand rupees will be invested in it, then at some time 1 lakh rupees will be invested.
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how much money is invested
There is a source scheme under which you keep the lump sum money and another target scheme in which the money is transferred in installments at regular intervals. How much money will be transferred is decided by the equity valuation index. Equity Valuation Index is prepared with equal weightage to Price to Earnings (PE), Price to Book (PB), (G-Sec x PE) and Market Cap to GDP, etc. In this, investors decide a base installment amount, up to a certain amount of which is transferred in one go.
For example, in ICICI Prudential Booster STP, only a maximum of 5/10 times of the base installation can be transferred to the target scheme. The minimum base installation in ICICI Prudential Booster STP is Rs 1000.