Once you know your goals, investors need to decide which investment schemes to invest in based on their risk appetite. It is equally important to know one’s risk appetite as this way you can get a clear idea of ​​how much of your monthly income you can allocate. It is always good to diversify your portfolio with financial schemes suited to your risk appetite. If you are someone who seeks long-term capital gains and doesn’t mind taking a slightly aggressive approach to your investments, then you can consider investing in mutual funds.
What are mutual funds?
Mutual fund houses collect funds from investors sharing a common investment objective and invest in this pool of funds in the Indian economy based on stocks and other debt and money market instruments such as bonds, government securities, certificates of deposit (COD), treasury bills, etc. Let’s invest the pool. On the risk profile and investment objective of the scheme. This pool of capital raised through investors is called a mutual fund. Mutual fund investors are allotted mutual fund units in proportion to the amount invested and based on the current net asset value (NAV) of the fund. It is believed that the performance of a mutual fund may depend on the performance of its underlying assets and the sectors or industries in which they invest.
Just like there are two options for investing in mutual funds i.e. through lumpsum investment or SIP (Systematic Investment Plan), mutual fund houses also introduce the option of SWP (Systematic Withdrawal Plan) for those seeking regular income through their mutual fund investments. We do. If you want to know about Systematic Withdrawal Plan, keep reading.
What is Systematic Withdrawal Plan (SWP)?
Are you wondering how you will take care of your expenses after your retirement and looking to augment your income? If you wish, you can plan your investments
systematic withdrawal plan
(SWP). A systematic withdrawal plan allows you to withdraw a predetermined amount every month at fixed intervals. A systematic investment plan is the opposite of a systematic investment plan (SIP). In SIP, the investor decides the amount and date on which the money is debited from his savings account and transferred to the mutual fund. In SWP, a pre-determined amount is debited from the mutual fund of the unitholder and electronically transferred to his/her savings bank account. SWP can be considered by anyone who wants regular income. It can be a retired person or someone who is planning to start their own business or anyone who wants regular income through their mutual fund investments.
Here is an example of how Systematic Withdrawal Plan works:
If you have invested Rs. 1,20,000 in a mutual fund scheme, you can set up an SWP to withdraw Rs. 10,000 every month for a predetermined period of 12 months.
Why choose SWP for regular income?
Dividend payouts are not guaranteed and happen only if the scheme manages to make capital gains, SWPs do not have any such restrictions on their withdrawal policies. An investor is entitled to his fixed monthly withdrawal amount, regardless of the market performance of the mutual fund scheme. This can be a better option than dividend where the fund manager decides when to pay the dividend to the investors. Also, those who opt for SWP can benefit from the cost averaging of Rs. With SWP, you can withdraw a pre-determined amount at pre-determined intervals. All one has to do is fill the automatic withdrawal for the specified time period as per their financial needs.
As an investor, if you are assured of getting a fixed amount, it is beneficial for the investor as they do not need to worry about the market performance of the scheme. For someone who seeks financial independence, a systematic withdrawal plan can prove to be a sensible option.
Now that you know how SWP works, have you decided to choose one? If you want, you can also start SWP for any member of your family so that they can become financially independent.
But investing in mutual funds has its own risks and if you are someone who is completely new to the world of investing or do not understand financial planning, we recommend you to take the help of a financial advisor or a mutual fund expert. Invest smartly and do not exceed your risk appetite as mutual funds invest in equity and capital gains from equity investments are never guaranteed.
“This is an investor education and awareness initiative by Axis Mutual Fund. Investors need to complete a one-time KYC process. For more details visit www.axismf.com or contact us at [email protected]. Investors should only Should deal with registered mutual funds, details of which are available at www.sebi.gov.in – INTERMEDIARIES/MARKET INFRASTRUCTURE INSTITUTIONS section. For any grievance redressal, investors may call us at 1800 221 322 or write to us at customerservice@ axismf.com or register a complaint on SEBI SCORE portal.
https://scores.gov.in,
Mutual Fund investments are subject to market risks, read all scheme documents carefully.