A Systematic Withdrawal Plan (SWP) is an intelligent way to withdraw money at regular intervals from large investments while you allow them to continue to grow with the market. With a SWP, you can predetermine an amount to be withdrawn monthly with minimum damage to your invested corpus.
Let's understand SWP with an example:
Jaya is a business owner. To date, she has invested regularly and collected a corpus of Rs. 30 lakhs, with an aim to secure herself during her retirement period and maintain the same lifestyle with regular cash withdrawals. In this case, she opted for a SWP by investing the corpus via a lumpsum transaction in a single mutual fund (with a low-to-medium risk and projected annual growth rate of approx +10%), and setting up a SWP in that fund for the 1st of each month for Rs. 30,000 per month.
At the end of the first year, her corpus is down by only Rs. 76,216 while her total withdrawals add up to Rs. 3,60,000.
Over the next 15 years, she can continue the same withdrawals. While the invested money will keep growing, she will comfortably be able to sustain herself with the monthly withdrawals. Thus through a SWP, she continues to benefit from the growth in her corpus and regular monthly withdrawals. Our online SWP calculator
helped Jaya make the right decisions for her retirement.
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