SWP - Systematic Withdrawal Plan
SWP - Systematic Withdrawal Plan
An ADDITIONAL SOURCE of CASH FLOW is no longer a luxury, IT’S A NECESSITY!
An ADDITIONAL SOURCE of CASH FLOW is no longer a luxury, IT’S A NECESSITY!
Why an Additional Source of Cash Flow Is Essential
Why an Additional Source of Cash Flow Is Essential
An additional source of cash flow – A NEED Building an additional source of cash flow is the need of the hour, because life is all about LIVING IT TO THE FULLEST.
1
Day to Day Expenses
Day to day expenses include routine living costs like food, travel, utilities, and other essential daily needs.
2
Source of support for dependents
A reliable source of support that provides regular income to meet the financial needs of dependents.
3
Regular cash flow during retirement years
Ensures steady and predictable cash flow during retirement to manage expenses comfortably.
4
Leisure Activity
5
Expenses for children’s Higher education
Ensures planned financial support for children’s college and professional education needs.
6
Monthly EMIs
Helps manage regular loan repayments smoothly without financial stress.
Here’s why you should choose SWP
Here’s why you should choose SWP
A Systematic Approach
Unlike traditional investments, SWP follows a systematic approach where you receive fixed withdrawals directly in your bank account on a scheduled date.
A Convenient Way
With SWP, one can enjoy a steady source of cash flow without much hassle. There's no overhead/maintenance cost attached which makes it even better
Flexible Withdrawals
You get to decide the frequency, amount, start, and end date of withdrawals which helps you plan for your financial needs.
Capital Appreciation
Along with regular withdrawals, you keep getting good returns on your capital invested, which helps in capital appreciation in the long term.
Tax Efficiency
Considering a lump sum capital involved, SWP is one of the most tax-efficient modes of investment.Tax is levied only on the capital gains and no TDS is applied.
SWP Vs Traditional Savings
SWP Vs Traditional Savings
For a regular cash flow, Traditional Savings are more popular, but an SWP in mutual funds is better. Let’s see how.
Factors | SWP (Systematic Withdrawal Plan) | Traditional Savings |
|---|---|---|
Withdrawal Flexibility | High – Flexible withdrawals | Low – Fixed returns |
Risk | Moderate (Market-linked) | Low |
Yield | 8% – 12% (Market-based) | 4% – 7% |
Tax Rate | 12.5% on LTCG above ₹1,25,000 | As per Income Tax Slab |
TDS | No TDS | 10% if interest exceeds ₹40,000 (₹50,000 for senior citizens) |
Example of SWP
Example of SWP
Mr. Varma started an SWP for his retirement at the age of 60. Today, his age is 80.
He invested ₹1.50 crore through an SWP in hybrid mutual funds, with a monthly withdrawal of ₹1 lakh for a period of 20 years.
Through this, he could withdraw for 20 years (₹2.40 crore) hassle-free, and in the end, the estimated value of his corpus is ₹2.57 crore, meaning he received an approximate value of ₹4.97 crore.
- Invested amount (20 years ago) = ₹1.50 Crore
- Monthly withdrawal amount = ₹1,00,000
- SWP period = 20 years
- Total withdrawal = ₹2.40* Crore
- End value at maturity = ₹2.57* Crore
- Approximate value received = ₹4.97* Crore
DID YOU KNOW ?
Seeking guidance
SWP is one of the most efficient tools that can be used to generate regular cash flow during retirement.
DID YOU KNOW ?
Seeking guidance
SWP is one of the most efficient tools that can be used to generate regular cash flow during retirement.
Investors should seek guidance from a mutual fund distributor (MFD). An MFD can guide investors in their entire investment journey by understanding financial needs and risk profile. Moreover, MFDs hand-hold investors throughout their investment journey, which allows investors to ride the waves of market volatility with confidence.
