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SWP or Systematic Withdrawal Plan is an excellent way to earn regular income from your mutual fund investment. Read this post to know how you can use online SWP calculation tool to create solid SWP strategies.
Apart from SIP (Systematic Investment Plan) which allows you to invest a small amount on regular intervals in your selected mutual fund, SWP (Systematic Withdrawal Plan) is another excellent feature of mutual funds. While you invest a small amount on a regular basis through SIP, you can withdraw small amounts at regular intervals with SWP. Many different types of mutual funds in India now offer SWP benefit, making it easier for investors to build solid investment strategies.
Moreover, there are now online calculators that can help significantly in creating SWP strategies. If you are planning to opt for SWP, these are few ways in which you can use the calculator-
- Plan your retirement with SWP
SWP in mutual funds is one of the best ways to prepare yourself financially for your retirement. With the online calculator, you can select your investment amount, mutual fund scheme, an amount that you’d like to withdraw through SWP, the start date of the investment, and more.
Use this to understand the SIP amount that you should invest to withdraw the required SWP amount at a later stage.
- Manage Monthly Expenses
Assume that you’ve got a bonus from your company or an investment policy of yours have matured recently. Now you’ve got a lump sum amount which you plan to use for your monthly expenses. Rather than keeping the money in your savings account, invest it in an ultra-short or liquid fund and opt for SWP which can be withdrawn every month.
This way, you’ll not only be able to keep up with your expenses, but your investment can also appreciate over time.
- SWP in MIP
Monthly Income Plans (MIPs) are highly recommended for people looking for regular income. However, most investors do not know that they can gain more by investing in a MIP fund with growth option and opting for monthly SWP. Higher investment term would bring in better returns.
Adjust the investment duration of different MIPs on the calculator to pick the right fund and duration.
- Take Maximum Tax Advantage
Mutual fund SWP is also one of the most tax-efficient investments. While you’ll have to pay short or long-term capital gain taxes when you withdraw money from the fund, it is still better than the DDT (Dividend Distribution Tax) charged in mutual funds and stock investments.
Even in equity funds, where there is no long-term capital gains tax, SWP is a great option.
- SWP in Debt Funds
If you want to invest a lump sum amount in a mutual fund, but have a low-risk appetite, then a long-term debt fund along with SWP can be a great combination. Debt funds are not as risky as equity funds, and with SWP, you’d get a fixed income at fixed intervals.
Use the online SWP calculator to see how a debt fund and SWP can help you earn regular income from your investment at minimum risk.
No matter if you are retired and living on a pension, a housewife looking to manage monthly expenses better, or just a working professional planning for retirement, SWP is an excellent feature that can help you achieve a lot of different financial goals. Understand the benefits of SWP and use an online calculator to create solid mutual fund investment strategies.