How SWP Works:
With SWP, investors can choose the amount and frequency of withdrawals from their mutual fund investment. They can set up a fixed withdrawal amount or opt for a variable withdrawal, where a certain percentage of the invested amount is withdrawn periodically. The withdrawals can be made on a monthly, quarterly, or annual basis.
Advantages of SWP:
a. Regular Income: SWP provides investors with a steady income stream from their mutual fund investments. It can be particularly useful for retirees or individuals seeking supplemental income during specific periods.
b. Professional Management: By opting for SWP, investors can leave the management of their investment portfolio to professional fund managers while receiving regular payouts.
c. Tax Efficiency: Depending on the type of mutual fund and the holding period, SWP can be more tax-efficient than other forms of withdrawals, especially in the case of equity-oriented funds with a longer holding period.
d. Flexibility: SWP allows investors to tailor their withdrawals based on their financial needs. They can adjust the withdrawal amount or frequency as per changing circumstances.
e. Wealth Preservation: SWP helps investors preserve their investment capital, as they only withdraw a portion of the returns generated by the mutual fund. This way, the investment continues to grow, even while withdrawals are made.
