Systematic withdrawal plan: Invest once in the Systematic Withdrawal Plan and earn fixed every month, know the benefits
What is the difference between SIP and SWP? In a SWP, the investor can invest as much as he wants, and withdraw the amount whenever he wants.
A systematic Withdrawal Plan (SWP) is the best option for those investors who want to earn a fixed amount every month by investing once. Huh. In this, you keep getting the fixed amount at a fixed time i.e. every month, three months, or throughout the year. Due to this, your source of earning remains open at certain times, and the need for money is fulfilled. In this type of plan, whenever the investor wants, he can invest as much as he wants, and he can also withdraw the amount.
Mutual Fund investment is a better option to earn higher returns. Investors get the option of a Systematic Withdrawal Plan in mutual fund investment, which is becoming quite popular. It is quite different from a Systematic Investment Plan (SIP). Because you can invest money in SIP and withdraw it on time. But after investing in SWP, capital gain or appreciation amount is achieved at a fixed time.
Systematic Withdrawal Plan (SWP) is the best option for those investors who want to earn a fixed amount every month by investing once. In this, you keep getting the fixed amount at a fixed time i.e. every month, three months, or throughout the year. Due to this, your source of earning remains open at certain times, and the need for money is fulfilled. In this type of plan, whenever the investor wants, he can invest as much as he wants, and he can also withdraw the amount.
Mutual Fund investment is a better option to earn higher returns. Investors get the option of a Systematic Withdrawal Plan in mutual fund investment, which is becoming quite popular. It is quite different from a Systematic Investment Plan (SIP). Because you can invest money in SIP and withdraw it on time. But after investing in SWP, the capital gain or appreciation amount is achieved at the specified time.
Two types of withdrawal plans
In the Systematic Withdrawal Plan, a fixed amount is withdrawn at fixed times of 1 month, 3 months, 6, and a year. This amount can be of two types Fixed Periodic Withdrawal and Appreciation Withdrawal.
Fixed Periodic Withdrawal in a Systematic Withdrawal Plan means that after investing a lump sum amount in the plan, the asset management company sells some units of the mutual fund scheme every month at a fixed time. The sale proceeds are transferred to the investor’s account every month. This process continues till the amount invested by the investor or the mutual fund units purchased from his remains.
Appreciation Withdrawal in a Systematic Withdrawal Plan means that if you have invested Rs. 10 lakh in a fund scheme and it grows by 1.5% per month i.e. appreciates, then the increased amount i.e Rs. 15,000 will continue to be transferred to the investor’s account every month. This has the advantage that only the appreciation amount is withdrawn, so the principal amount invested remains the same as before.
For the investors of the Systematic Withdrawal Plan, it would be important to note that the amount withdrawn is subject to tax depending on the status of the mutual fund i.e. non-equity fund or equity fund. In such a situation, conditions apply and tax is levied accordingly, which can be 15% in the short term and 10% in the long term.
