Systematic Withdrawal Plan (SWP)

What is Systematic withdrawal Plan

A Systematic Withdrawal Plan (SWP) is a strategy that lets you withdraw a fixed amount of money from your mutual fund investments on a regular basis—like monthly, quarterly, or annually. It’s a popular choice for retirees or anyone who wants a steady income from their investments.

Key Features of SWP

  • Regular Withdrawals: You can choose how much to withdraw and how often, giving you flexibility based on your needs.

  • Capital Gains Management: You can withdraw only the gains from your investment, leaving the original amount intact.

  • Rupee Cost Averaging: With regular withdrawals, you'll sell more units when the prices are low and fewer when they are high, which can help average out the costs over time.

Benefits of SWP

Steady Income: SWP is great for generating a consistent income, especially for retirees or anyone needing regular cash flow.

Tax Efficiency: Unlike dividends, which may come with a tax, SWP withdrawals are only taxed on the capital gains when you sell the units, which might be more tax-friendly.

Investment Longevity: If you withdraw less than the returns your investment generates, your money can last longer compared to traditional withdrawal methods.

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