Jan
A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount monthly from your investment, while the remaining corpus continues to grow. Here’s why SWPs are ideal:
For Retirees:
- Provides a steady cash flow for living expenses.
- Avoids the need to dip into your savings unpredictably.
- Ensures your remaining investment keeps working for you, helping to combat inflation.
For Younger Investors:
SWPs can create a consistent income stream to meet regular expenses, like EMIs or household costs, while keeping the principal invested.
Example for Better Understanding:
Let’s say Mr. Sharma, a retiree, invests ₹30 lakhs in a debt-oriented mutual fund offering an average annual return of 7%.
He sets up an SWP of ₹20,000 per month to cover his living expenses. Here’s what happens:
- He withdraws ₹2.4 lakhs annually for his expenses.
- Despite the withdrawals, his corpus continues to grow at 7%, ensuring he doesn’t outlive his savings.
Outcome: Even after 10 years of withdrawals, Mr. Sharma still retains a significant portion of his investment, thanks to the growth of his corpus.
Why Choose SWPs?
- Offers a predictable income stream.
- More tax-efficient compared to traditional fixed deposits (tax is only on gains, not the principal).
- Keeps your wealth growing while meeting expenses.
💡 Takeaway: Whether you’re a retiree seeking financial independence or a younger investor wanting regular cash inflows, SWPs can be tailored to meet your needs.
Explore SWPs and other retirement-friendly investment options today for a stress-free financial future!