What is SWP?
SWP stands for Systematic Withdrawal Plan. It's a facility offered by mutual funds that allows investors to withdraw a fixed amount regularly from their mutual fund investments. Unlike SIP (Systematic Investment Plan) where you invest money regularly, SWP lets you withdraw money systematically.
How does SWP work?
In SWP, you specify the amount you want to withdraw and the frequency (monthly, quarterly, etc.). The mutual fund company will redeem the required number of units from your investment to provide you with the specified amount. This creates a regular income stream from your investments.
What are the benefits of SWP?
SWP offers several benefits: regular income stream, rupee cost averaging on withdrawals, tax efficiency compared to fixed deposits, flexibility to change withdrawal amounts, and the ability to keep your remaining investment growing. It's particularly useful for retirees or those seeking regular income from their investments.
Who should consider SWP?
SWP is ideal for retirees seeking regular income, investors who want to create a monthly income stream, those looking for tax-efficient withdrawal strategies, and anyone who wants to systematically book profits from their mutual fund investments while keeping the remaining amount invested for growth.