A Systematic Withdrawal Plan (SWP) is a method to get a monthly payout from a mutual fund scheme with a growth plan. Investors can automatically withdraw a fixed amount at regular intervals, whether monthly, quarterly or yearly, from such investments. SWP is a great tool for investors who want a regular cash flow but do not want to withdraw too much at a time.
If you want to start investing in SWP, check out these top Systematic Withdrawal Plans in India, benefits and things to consider before investing. Read on!
The following are some of the best mutual funds across different categories to invest in via SWP:
Name of the Mutual Fund Scheme | Category of the Mutual Fund | 5 Year Annualised Returns |
Mirae Asset Tax Saver Fund | ELSS | 19.69% as of February 28 2022 |
Canara Robeco Equity Tax Saver | ELSS | 18.99% as of February 28 2022 |
Canara Robeco Bluechip Equity Fund | Large cap fund | 18.85% as of February 28 2022 |
Axis Bluechip Fund | Large cap fund | 17.48% as of February 28 2022 |
Edelweiss Balanced Advantage Fund | Balanced advantage fund/dynamic asset allocation fund | 13.88% as of February 28 2022 |
Navi Large Cap Equity Fund | Large cap fund | 12.72% as of February 28 2022 |
PGIM India Ultra Short Term Fund | Ultra short duration fund | 7.61% as of February 28 2022 |
ICICI Prudential Ultra Short Term Direct Fund | Ultra short duration fund | 7.14% as of February 28 2022 |
Quant Liquid Fund | Liquid fund | 6.12% as of February 28 2022 |
Franklin India Liquid Direct Fund | Liquid fund | 5.68% as of February 28 2022 |
SWPs allow you to make fixed withdrawals from a mutual fund scheme at regular intervals. In other words, the SWP redeems a part of your ongoing investment to honour the specified payout. Such payments will continue till there are no units left in your holdings.
The number of units redeemed will depend on the SWP amount and the scheme’s NAV (Net Asset Value) on its withdrawal date. Let us consider the following example to understand how SWP plans work:
Ms. Aggarwal has invested a lump sum amount of Rs. 2 lakh in a fund with an NAV of Rs. 20. Thus, 10,000 fund units are allotted. She starts a monthly SWP of Rs. 5000 after a year from the investment date.
In the first month, the scheme has an NAV of Rs. 40. To generate Rs. 5000, the SWP will redeem 125 fund units (Rs. 5000/40), and 9875 units are left. For the second month, assuming the NAV is Rs. 50, the SWP redeems 197.5 fund units. Now, the balance left is 9677.5 fund units.
Here are some situations where one may invest in SWP mutual funds:
For debt funds, STCG will be applicable at income tax rates of individual investors for a holding period of less than 36 months. If the holding period is longer, LTCG is taxed at 20% with indexation benefits.
With Navi, you can start an SIP with Rs. 500 or make a lump sum investment. You also have the option to invest in the top 50 companies through Nifty 50. The benefits include – the lowest expense ratio*, easy-to-navigate dashboard, 100% paperless KYC and zero transaction charges*. If you want to unlock the power of passive investing, visit Navi Mutual Fund and explore a host of mutual funds
*t&c applied
A systematic Withdrawal Plan is helpful for investors looking for regular cash flows. You can choose the interval and amount of withdrawals as per your expenses. After retirement, you can also redeem your investments via SWPs to sustain your needs for a longer time. To choose the best SWP plans, refer to your investment profile and long-term fund performance.
Ans: Existing investors can contact their financial advisor or mutual fund distributor to apply for an SWP. They will need to file an SWP form and submit it to the AMC (Asset Management Company) or registrar for processing. New investors can opt for an SWP when submitting the application form for a mutual fund.
Ans: You will need to be mindful of where you are investing and how much you want to withdraw to set up an SWP. Investors can opt for an SWP that is lower than the scheme’s average returns to avoid touching the capital.
Ans: Yes, many investors overlook the risks of not redeeming the entire investment for the possibility of generating extra returns. For example, if you have an equity investment and you redeem in a staggered manner via SWPs, the remaining fund is subject to market risks.
Ans: If your withdrawals are more than the investments earned, your retirement corpus may not last for very long. Equity markets can be volatile, and a market downturn can deplete your retirement corpus early. This is not much of a problem if you have a considerable investment amount.
Ans: Unlike an SWP, which redeems fund units at fixed intervals, a Systematic Transfer Plan (STP) involves transferring money to another mutual fund. The aim of an STP is to rebalance your investment portfolio by transferring funds to a different asset class.
Want to put your savings into action and kick-start your investment journey 💸 But don’t have time to do research? Invest now with Navi Nifty 50 Index Fund, sit back, and earn from the top 50 companies.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
Mutual Funds
15 Best Direct Mutual Funds in India 2023 – Top Direct Mutual Funds
Direct mutual funds or direct mutual fund plans are mutual fund schemes that are sold directly from... Read More »Mutual Funds
20 Best Debt Mutual Funds to Invest in India 2023 – Top Performing Debt Funds
Debt mutual funds are mutual funds that invest in fixed-income securities such as corporate bonds, ... Read More »Mutual Funds
10 Best Conservative Hybrid Mutual Funds in India 2023 – Benefits and Returns Calculator
A conservative hybrid fund is a type of hybrid mutual fund that invests 75%-90% of its overall asse... Read More »Mutual Funds
10 Best Blue Chip Funds to Invest in India 2023 – Calculator and Returns
Blue-chip funds are basically large-cap funds that invest a major portion of their assets in stocks... Read More »Mutual Funds
List of Best Flexi Cap Mutual Funds to Invest in India 2023
Flexi-cap funds are mutual fund schemes that invest in stocks of companies across market capitalisa... Read More »Mutual Funds
Index Fund – Types, Benefits, How does It Work and How to Invest in 2023
What is Index Fund? An index fund is a passively-managed mutual fund with a portfolio built to t... Read More »Mutual Funds
10 Best FMCG Mutual Funds to Invest in India 2023
Fast-moving Consumer Goods (FMCG) mutual funds are a type of mutual funds that invest in companies ... Read More »Mutual Funds
List of 10 Best Gold Mutual Funds in India to Invest in 2023
Gold Mutual Funds are funds that invest in gold and gold-related assets such as bullion, coin... Read More »Mutual Funds
20 Best Index Funds in India to Invest in 2023 (27th Jan)
What is an Index Fund? An index fund is a type of mutual fund or exchange-traded fund (ETF) that... Read More »Mutual Funds
15 Best Mid Cap Mutual Funds in India to Invest (Updated on Jan 2023)
A mid cap mutual fund is a type of mutual fund that invests in the stocks of mid-cap companies. As ... Read More »Mutual Funds
10 Best Corporate Bond Funds in India 2023 – With Returns
Corporate bond funds are debt funds that invest at least 80% of the investment corpus in companies ... Read More »Mutual Funds
Best Arbitrage Mutual Funds to Invest in India: Returns and Taxation
Arbitrage funds are hybrid mutual fund schemes that aim to make low-risk profits by buying and sell... Read More »Mutual Funds
Top 10 Chit Fund Schemes in India in 2023
Chit funds are one of the most popular return-generating saving schemes in India. It is a financial... Read More »Personal Loans
₹15,000 Personal Loan: Features, Benefits, EMI and Interest Rate
Financial emergencies can be short term and you might not always require a large amount to handle t... Read More »Personal Loans
Personal Loan Interest Rates in India – Charges and Processing Fee
Applying for a personal loan? Have you compared the personal interest rates and processing fees? ... Read More »Mutual Funds
10 Best Gold ETFs to Invest in India [2023]
Gold ETFs or Gold Exchange Traded Funds are passively managed funds that track the price of physica... Read More »Health Insurance
TPA in Health Insurance – Full Form, Functions and Roles
TPA (full form – Third Party Administrator) is a licensed intermediary between health insurance p... Read More »Banking
ATM Card AMC (Annual Maintenance Charge): Explained
ATM Card AMC (Annual Maintenance Charge) is a maintenance fee levied by banks every year. This debi... Read More »Mutual Funds
Top 10 Demat Accounts in India [Lowest Brokerage Charges]
A Demat account was created to eliminate the time-consuming and inconvenient procedure of purchasin... Read More »Mutual Funds
20 Best Index Funds in India to Invest in 2023 (27th Jan)
What is an Index Fund? An index fund is a type of mutual fund or exchange-traded fund (ETF) that... Read More »All information is subject to specific conditions | © 2023 Navi Technologies Ltd. All rights are reserved.
Start Small. Dream Big.
Start your Investment Journey with just ₹10