Investment Strategy
An Additional Source of Cash Flow is No Longer a Luxury, IT'S A NECESSITY!
Systematic Withdrawal Plan (SWP) in Hybrid Mutual Funds - Your pathway to generating regular cash flow during retirement and meeting your financial needs while maintaining capital appreciation.
Regular Cash Flow During Retirement
SWP: Better Than Traditional Savings
Generate Monthly Income in Retirement
Tax-Efficient Regular Withdrawals
A Need, Not a Luxury
Building an additional source of cash flow is the need of the hour, because life is all about LIVING IT TO THE FULLEST.
Day-to-Day Support
Regular cash flow to meet your daily expenses and maintain your lifestyle.
Expenses for Dependents
Support your family members and dependents with regular financial assistance.
Children's Higher Education
Fund your children's education expenses with systematic withdrawals.
Regular Cash Flow During Retirement
Maintain financial independence during your golden years with steady income.
Monthly EMIs
Meet your loan obligations and EMI payments without financial stress.
Leisure Activities
Enjoy your hobbies, travel, and leisure activities with regular cash flow.
What is SWP?
Systematic Withdrawal Plan (SWP) in Hybrid Mutual Funds is a withdrawal facility where investors get to redeem units at pre-decided intervals and frequency to get regular cash flow from their lump sum investment.
Withdrawal can be done monthly, quarterly, half-yearly, or yearly, giving you complete flexibility to plan your cash flow according to your financial needs.
SWP is the reverse of SIP - instead of investing regularly, you withdraw regularly to meet your financial needs.
Here's Why You Should Choose SWP
A Systematic Approach
Unlike traditional investments, SWP follows a systematic approach where you receive fixed withdrawals directly in your bank account on a scheduled date.
A Convenient Way
With SWP, you can enjoy a steady source of cash flow without much hassle. There's no overhead or maintenance cost attached, which makes it even better.
Flexible Withdrawals
You get to decide the frequency, amount, start, and end date of withdrawals, which helps you plan for your financial needs effectively.
Capital Appreciation
Along with regular withdrawals, you keep getting good returns on your capital invested, which helps in capital appreciation in the long term.
Tax Efficiency
Considering a lump sum capital involved, SWP is one of the most tax-efficient modes of investment. Tax is levied only on the capital gains, and no TDS is applied. This makes it more attractive compared to traditional fixed deposits where TDS may apply on interest income.
SWP vs Traditional Savings
For regular cash flow, traditional savings are more popular, but an SWP in mutual funds is better. Let's see how:
| Factors | SWP in Hybrid Mutual Funds | Traditional Savings |
|---|---|---|
| Withdrawal Flexibility | High | Moderate |
| Yield | 8% - 12% | 4% - 7% |
| Risk | High to Very High | Low |
| Return Type | Based on Market | Fixed Return |
| Tax Rate | 12.5% (Only on long-term gains more than ₹1,25,000 in a year) | As Per IT Slab (10% if interest exceeds ₹40,000 in a year) |
| TDS | NO TDS | If interest exceeds ₹40,000 in a year (₹50,000 in case of senior citizen) |
Real-Life Example: Mr. Varma's Success Story
Mr. Varma started an SWP for his retirement at the age of 60. Today, his age is 80. He invested ₹1.50 crore through an SWP in hybrid mutual funds, with a monthly withdrawal of ₹1 lakh for a period of 20 years.
Invested Amount
₹1.50 Crore
(20 years ago)
Monthly Withdrawal
₹1,00,000
Per month
Total Withdrawal
₹2.40 Crore*
Over 20 years
End Value
₹2.57 Crore*
At maturity
Approximate Total Value Received: ₹4.97 Crore*
Through this, he could withdraw for 20 years (₹2.40 crore) hassle-free, and in the end, the estimated value of his corpus is ₹2.57 crore, meaning he received an approximate value of ₹4.97 crore.
*Assuming investment in Hybrid Mutual Fund; 50% in equity and 50% in debt, and an average return of 9.62% p.a. as per AMFI Best Practices Guidelines Circular No. 135/BP/109-A/2024-25 dated September 10, 2024.
Did You Know?
SWP is one of the most efficient tools that can be used to generate regular cash flow during retirement. It combines the benefits of regular income with the potential for capital appreciation, making it an ideal solution for retirees and those seeking additional income streams.
Seeking Guidance
Investors should seek guidance from a mutual fund distributor (MFD). An MFD can guide investors in their entire investment journey by understanding financial needs and risk profile. Moreover, MFDs hand-hold investors throughout their investment journey, which allows investors to ride the waves of market volatility with confidence.
Ready to Create Your Additional Cash Flow?
Contact your mutual fund distributor to know more about SWP and get regular cash flow.
Disclaimer
The figures/projections are for illustrative purpose only. The situations/results may or may not materialise in future. Mutual Fund investments are subject to market risk, Read all scheme related documents carefully. Past performance may or may not be sustained in future and is not a guarantee of any future returns.
The information contained herein does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell, or otherwise transact in any security or investment product or an invitation, offer or solicitation to engage in any investment activity. It is strongly recommended that you seek professional investment advice before taking any investment decision.
Any investment decision that you take should be based on an assessment of your risks in consultation with your investment adviser. To the extent that any information is regarding the past performance of securities or investment products, please note such information is not a reliable indicator of future performance and should not be relied upon as a basis for an investment decision.
Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing.
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