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Systematic Withdrawal Plan (Opposite of SIP) - Explained

Writer: MyRupayaMyRupaya



What is a mutual fund's SWP?


The SWP is a mutual fund investment in which you specify that a set amount of money be transferred from your mutual fund investment to your bank account on a regular basis. Assume you're seeking for an investment option that will allow your investment to grow while also allowing you to collect money from the corpus on a regular basis. The money can be credited to your bank account on any day of the month, quarter, or year that you specify. By redeeming mutual fund scheme units at regular periods, the SWP Plan provides cash flow. You will continue to receive regular payments through SWP for the time period you specify or until the corpus amount is depleted.


For example, an investor may contribute Rs. 10 lakh and request that Rs. 10,000 be paid every month on the first. Then, on the first of every month, units valued Rs. 10,000 will be redeemed.


SWP is a good option for people who desire a regular source of money in their account throughout their retirement years or who want a regular base of money.


The opposite of the Systematic Investment Plan is the Systematic Withdrawal Plan (SIP). SIP, on the other hand, is a method of investing in a mutual fund plan on a regular basis. SWP offers you with consistent cash flow and helps you to build your mutual fund investment. There are three compelling reasons to use a methodical withdrawal strategy.


It's crucial to keep in mind that the tax treatment of dividends and SWPs differs, so investors should prepare accordingly.



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