Smart things to know: Systematic withdrawal plan (SWP)
SWPs enable an investor in a mutual fund to withdraw amounts periodically from the investments made in a scheme.
Updated:
SWPs enable an investor in a mutual fund to withdraw amounts periodically from the investments made in a scheme.
An investor has to register for an SWP with the mutual fund, indicating the scheme and the period of the SWP.
SWP has to be registered with a specific date, amount and frequency. A retired investor can seek monthly withdrawal from his folio, over the next year.
The amount being withdrawn has to be indicated upfront. It can be a fixed amount, or limited to the extent of appreciation in the value of the investment.
SWPs for fixed amount may result in paying out the capital invested. SWP for appreciation amount will vary in value depending on how much appreciation is available.
SWP is redemption from a scheme, so tax provisions apply accordingly. SWP is tax efficient for an investor who likes to save on dividend distribution tax.
The content on this page is courtesy Centre for Investment Education and Learning (CIEL).
An investor has to register for an SWP with the mutual fund, indicating the scheme and the period of the SWP.
SWP has to be registered with a specific date, amount and frequency. A retired investor can seek monthly withdrawal from his folio, over the next year.
The amount being withdrawn has to be indicated upfront. It can be a fixed amount, or limited to the extent of appreciation in the value of the investment.
SWPs for fixed amount may result in paying out the capital invested. SWP for appreciation amount will vary in value depending on how much appreciation is available.
SWP is redemption from a scheme, so tax provisions apply accordingly. SWP is tax efficient for an investor who likes to save on dividend distribution tax.
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The content on this page is courtesy Centre for Investment Education and Learning (CIEL).
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