SWP- Systematic Withdrawal Plan​​

We can add drops of water to fill up a bucket, the drops may be big or small but nonetheless it will fill the bucket. In a reverse sequence we can draw out portions from the bucket when required and satisfy our needs.

 

The world of mutual fund investing is no different. The Systematic Investment Plan (SIP) and the Systematic Withdrawal Plan (SWP) are somewhat analogous in nature to the example of water stated above. While SIP is a common and popular form of systematic investment in parts, the concept of SWP, the reverse of SIP, may not be known to everyone.

​

Systematic Withdrawal Plan (SWP) is a service offered by mutual funds which provides investors with a specific amount of payout at a pre-determined time intervals, like monthly, quarterly, half-yearly or annually.

​

Why opt for Mutual Fund SWP?

​

Investors in India, opt for Mutual Fund SWP for either of the two reasons:

​

I. To meet living requirements; usually after their retirement.

​

II. For the purpose of tax planning.

​

While retirement planning is the ideal area where Mutual Fund SWP can be very effective, some recent changes in the tax rules have boosted the efficacy of Mutual Fund SWP.