Systematic Withdrawal Plan: How to start SWP from Mutual Funds, EPF, etc? Check easy step-by-step guide and know SWP calculator
Though by now systematic investment plan or SIP is very much in common knowledge of people, Systematic Withdrawal Plan (SWP) is a comparatively unknown term yet.
Though by now systematic investment plan or SIP is very much in common knowledge of people, Systematic Withdrawal Plan (SWP) is a comparatively unknown term yet. This scheme allows the investors to withdraw from their mutual fund schemes every month on an already set date. This withdrawal could be a fixed or a variable amount and the withdrawal can be either annually, semi-annually, quarterly or even monthly. For example, if you have built a retirement corpus worth Rs.1.5 crore then the next step is to determine when you want to start withdrawals. This requires a lot of calculations and planning. For example, if you have an Employee Provident Fund (EPF) then also you need to plan your Systematic Withdrawal Plan (SWP) in coordination with your fund requirement. You must know that systematic withdrawals of your cash are as important as disciplined investments.
Steps to start your systematic withdrawal plans:
1. If you do not have much knowledge on financial matters, you can seek financial advice and discuss when you may start your SWP from your accumulated funds, your expectation of returns and appetite for risk.
2. You can have a monthly SWP of amounts such as Rs 10,000 or can even divide it into 2 funds of Rs 5,000 each, which will depend on your need.
3. Check different funds and their annualised returns. It is advisable that you may choose funds that deliver more than 10 per cent returns. Use digital tools like SWP calculator, to get a better idea about your SWP.
4. You may fill the SWP form and tell your financial advisor about the income you expect to derive from your investments.
5. Set a proper withdrawal plan, which is necessary to meet your needs in old age.
6. Once you fix your SWP plan, you will receive your planned amount automatically as you have set. It should be done in such a way that when you need cash the most, it is available.
7. You can also modify your withdrawal plans whenever needed.