What is a Systematic Withdrawal Plan (SWP) and how is it useful?

mutual fund SWP
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The versatility of mutual fund investments is one of the key reasons behind their popularity among investors. One such versatile feature of mutual funds is the systematic withdrawal plan or SWP. Let’s take a closer look at systematic withdrawal plan (SWP) in mutual funds to understand what it is, and whether it is useful to investors.

  • Table of contents:
  1. Understanding SWP in mutual funds
  2. The advantages of mutual fund SWP
  3. Who can benefit from SWP?
  4. Should investors opt for SWP?
  5. Bajaj Finserv AMC
  6. FAQ

Understanding SWP in mutual funds

SWP stands for systematic withdrawal plan. It is a plan that allows mutual fund investors to withdraw a specified amount of money from their mutual fund scheme at pre-decided intervals. In other words, it works in a manner that’s inverse to SIP. In SIP, you invest a certain amount of money in mutual funds at regular intervals. In SWP, you can withdraw an amount of money from your mutual fund scheme at a frequency of your choice – monthly, quarterly, semi-annually, or annually.

The advantages of mutual fund SWP

SWP is a great tool to have in the investing avenue. It is a relatively useful method to ensure regular inflow of funds. Moreover, it can provide investors with a sense of certainty as regards to cash flow. Irrespective of your tenure in the world of investing, an SWP can be effectively used by anyone to achieve their specific financial goals.
There are several advantages of opting for SWP in mutual funds.
Here are some of them:

  • Regular inflow of funds: An SWP can offer a potentially regular inflow stream to investors, which is especially beneficial for retirees looking to earn a steady income from their investments.
  • Flexibility: SWP offers you the freedom to choose the withdrawal amount and the frequency at which you can withdraw it.
  • Capital appreciation: The remaining units after each withdrawal continue to earn returns, leading to overall capital appreciation, depending on market movement.

Who can benefit from SWP?

SWP in mutual funds can be particularly beneficial for retired individuals or for any investor looking for a regular cash flow.

  • Retirees: After retirement, a steady flow of money becomes crucial, and SWP can fit the bill. The remaining amount continues to remain invested in the mutual fund, while the investor also gets regular pay-outs to meet their expenses.
  • Lumpsum investors: Apart from retirees, anyone having a large lumpsum invested in mutual funds and looking for regular inflow of funds can consider opting for SWP.

Should investors opt for SWP?

Deciding whether to opt for a mutual fund SWP depends largely on your individual financial goals and needs. If you require a regular stream of money from your mutual fund investment, an SWP can be a great option. However, it is crucial to remember that mutual funds are market-linked products and SWP can be subject to market volatility. Therefore, they may not be suitable for investors with a low-risk appetite.
To sum up, SWP in mutual funds can be a powerful tool in your financial planning arsenal, especially if you're looking for a regular inflow of money stream. It combines the growth potential of mutual funds with the convenience of systematic withdrawals, making it a compelling proposition. However, like any other investment decision, the importance of SWP lies in understanding how it aligns with your financial goals and risk tolerance.

Bajaj Finserv AMC

Bajaj Finserv AMC has launched three schemes including the liquid fund, overnight fund, and money market fund. Each of these investment options provides professional management, potentially steady returns, and relative stability of the invested amount. Additionally, another product, the Bajaj Finserv Flexi Cap Fund aims to generate long term wealth for the investors with the help of megatrends strategy. However, it is important for investors to assess their investment objectives, risk tolerance, and consult a financial advisor before making any mutual fund investments.


What is the interest rate in SWP?

The SWP (Systematic Withdrawal Plan) is a feature provided by mutual fund firms that enables investors to take a set amount of money from their mutual fund assets at regular intervals (such as monthly or quarterly). The return that the mutual fund earns on the amount invested is referred to as the returns from SWP.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.