SWP for regular income: Just as you invest regularly in mutual fund schemes through SIP investments, similarly with the help of SWP, you can withdraw the amount deposited in mutual funds as regular income.
To avail SWP, investment in mutual funds is required
One can avail the SWP scheme to receive regular income through mutual funds. But to avail the benefits of this scheme, you will have to first invest in mutual funds. You can take advantage of compounding like Systematic Investment Plan i.e. SIP. You can get 13 to 15 percent higher returns compared to other safe investment schemes like bank FD, NCD, POST. Whereas in these sources you can get a maximum return of 10 percent.
How to start SWP?
In SWP, the investor can decide the withdrawal amount, its frequency (monthly, quarterly and half-yearly) i.e. the period. Which is useful not only for retired people, but for all those who want to earn regular income. Proper use of Systematic Withdrawal Plan (SWP) requires planning. For this you need to know about the financial goals, risk appetite, investment strategy and applicable taxes.
How much fund is required?
Investing in SWP requires an investor to have a large amount of money. If you are already investing in mutual funds then SWP is not suitable for you. Because, it will affect your compounding returns. The fund amount is determined based on how much fund you wish to withdraw under SW.
13-14 percent return in SWP
If an investor invests in different market cycles, he can get returns of 13 to 14 percent in the long run. If you withdraw 8-9 percent annually. Nevertheless, your capital will continue to grow and maintain its growth.
beneficial for retired people
Akhil Chaturvedi, chief business officer, Motilal Oswal Asset Management, said SWP is generally the best plan for retirees. Apart from this, people who are near retirement can also avail the benefits of SWP.
