Systematic Withdrawal Plan

  • Systematic Withdrawal Plan (SWP) is a service offered by mutual funds which provide investors with a specific amount of payout at a pre-determined time intervals, which can be monthly, quarterly, half-yearly or annually. An investor can customize the cash flows as desired; he can either withdraw a fixed amount or just the capital gains on his investments. SWP provides the investor with a regular income and returns on the money that is still invested in the scheme.

  • There are two types of SWP

  • 1. Fixed Withdrawal

  • In a fixed withdrawal option, the investor specifies the amount he wants to withdraw from his investment on a monthly/quarterly basis

  • 2. Appreciation Withdrawal

  • in an appreciation withdrawal option, the investor withdraws only the appreciated amount on a monthly/quarterly basis.

How Does STP Work?

  • As in Systematic Investment Plan where one invests a fixed amount of money in a fixed interval, say every month, in a mutual fund—in case of an SWP, an investor would withdraw a fixed amount of money every month from a mutual fund. SWP is useful when one wishes to create an income stream from their investments, which many retired people are taking advantage of.

  • You first need to select the fund, then decide the rate at which you want to withdraw the amount, you may also decide a fixed amount or can also ask for appreciation amount only. As mutual funds are not a fixed return instrument and also the withdrawal rate is as per your choice, so the total return from the structure depends on product/Mutual fund return and your withdrawal per month

Advantages of STP

  • Benefits Of Systematic Withdrawal Plan:

  • 1. Regular Income

  • SWP helps in creating a regular flow of money from investments on a periodic basis.

  • 2. Tax Benefit

  • Instead of selling all the units at once, spanning the income across multiple intervals can lower the total tax. It is a tax efficient way of receiving regular income.

  • 3. Avoid Market Fluctuations

  • It saves an investor from market fluctuations, as regular withdrawal averages out return value.

  • You can become our partner for excellent return from systematic withdrawal plan (SWP). Thelegalank is working in Jaipur, Dehli, Mumbai, Bangaluru, India, France, Asia Pacific and all over the world


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