This plan is more amazing than SIP - invest once and earn every month, even more amazing benefits.

Systematic Withdrawal Plan: How would it be if whatever you invest, you also get regular income every month from it. Yes, you can also get regular income from your investment in Mutual Fund. For this, you have to invest in Systematic Withdrawal Plan (SWP). But, what is this SWP? How will it give you regular income? And when is doing SWP beneficial? Is this a better plan than SIP? We have tried to answer some such questions.

Systematic Withdrawal Plan (SWP) is a kind of facility. Through this, investors get back a fixed amount from Mutual Fund Schemes. Investors themselves choose how much money to withdraw in how much time. They can do this work on monthly or quarterly basis. However, the Monthly option (Regular Monthly Income) is more popular. Investors can withdraw only a fixed amount or they can withdraw the capital gains on the investment.

SWP can be started anytime. It can be started as soon as the first investment is made. If you are investing in a scheme, you can activate the SWP option in it. It can be started anytime for the need of regular cash flow. To activate SWP, you have to fill the instruction slip in the AMC stating the folio number, frequency of withdrawal, date of first withdrawal, bank account receiving money.

Systematic Withdrawal Plan (SWP) works just like Systematic Investment Plan. Systematic Withdrawal Plan is a 'panacea' for investors. In this, you can withdraw your money at regular intervals. This keeps the cash flow with the investor and there is no need to wait to withdraw long term investment. There is no hassle of any lock-in period.

Money can be withdrawn at regular intervals through SWP. In this, you can decide on monthly, quarterly and yearly basis when you need the money. There is an option to withdraw money from the account every month based on NAV. This money can be reinvested in MF or spent. SWP is specially designed for senior citizens. Senior citizens benefit more from this. They have to pay less tax on income.

From which fund do you want to run SWP? What is the amount of SWP you want? For how long do you want to run SWP? It is necessary to tell the fixed date of the month.

If your investment is in debt fund. You are getting 8% return. If you are withdrawing 10% annually, then in such a case you are spending capital. This can reduce your invested capital. Invest only the amount you need in debt fund in 5 years. Invest the extra amount in hybrid fund.

You need to tell the amount/date/period of your SWP. Every month money will be transferred to your account. This money is received from the sale of units of your fund. If the fund runs out of money, SWP will stop.

In SIP, a fixed amount is deducted from your account every month. The amount deducted from the account goes for investment in mutual funds. In SWP, the fixed amount comes to your bank account. The amount of SWP comes from the sale of mutual fund units.

Never run SWP from equity mutual funds. Your fund gets affected when the market falls. You will have to sell more units for the fixed amount. Doing this will finish the portfolio very quickly. Debt/liquid funds are a better option for SWP.

Investors can choose the amount as per their need. Expect good returns if you stay invested in the market. A good option to beat inflation. Can withstand fluctuations in the market.

STCG is applicable for less than 1 year in equity. STCG is applicable for less than 3 years in debt. If the profit in equity is more than Rs 1 lakh, tax will be applicable. Tax will be applicable on redemption of equity mutual funds. While doing SWP, you have to take care of tax liability. Every withdrawal is considered as a redemption. In such a case, you have to pay capital gain tax on them. Capital gain is charged as per the fixed tax slab.