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Monday, October 25, 2021

First SIP Then SWP: invest Rs 5000 monthly for 20 years; next 20 years you will get Rs 35000 every month

First SIP, Then SWP: Through Systematic Withdrawal Plan (SWP), investors get back a fixed amount from mutual fund scheme.

SIP/SWP Option in Mutual Fund: In today’s era, the popularity of mutual funds is increasing. Many investors, especially in cities, are considering mutual funds while doing financial planning. In fact, mutual funds are also a good option for those who do not invest directly in equity, where there is less risk than the stock market. Mutual funds are also getting better returns. Long term or say that during 10 years, there are many such schemes, which have given returns of 10 to 12 per cent per annum. Experts also say that if you are doing financial planning for long term like retirement, children’s education or marriage, then this is a better option. A smart way to invest here is that you can opt for SIP and later SWP i.e. Systematic Withdrawal Plan. We are telling you here how you can arrange a pension of 35 thousand rupees every month for the next 20 years, if you make a monthly SIP of 5 thousand rupees every month for 20 years.

Systematic withdrawal plan (SWP)

Through the Systematic Withdrawal Plan (SWP), investors get a fixed amount back from the mutual fund scheme. In how much time, how much money to withdraw, the choice is made by the investors themselves. This money can be withdrawn on a daily, weekly, monthly, quarterly, 6 months or yearly basis. By the way, the monthly option is more popular. If investors want to withdraw only a certain amount, or if they want, they can withdraw capital gains on the investment.

Systematic Investment Plan (SIP)

Under the Systematic Investment Plan, you get the facility to invest on a monthly basis instead of investing a lump sum in the scheme of a mutual fund. You can decide for yourself how much to invest in a scheme every month. The advantage of this is that even at once, all your money is not blocked. Rather, you can make monthly investment in it with your convenience. At the same time, by assessing the returns from time to time, there is also a facility to increase or decrease the SIP.

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Calculator: 20 years SIP

Monthly SIP: Rs 5000
Tenure: 20 years
Estimated Return: 12% per annum
Value of SIP after 20 years: Rs 50 lakhs

Calculator: next 20 years SWP

Investment in different schemes: Rs 50 lakhs
Estimated annual return: 8.5 percent
Annual Return: Rs 4.25 Lakh
Monthly Return: Rs 4.25 Lakh / 12 = Rs 35417

SWP is a reliable option

It has been observed that SWP is a more reliable option than dividend. In this, the investor has complete control. SWP is regular evacuation. Through this, the units are redeemed from the scheme. At the same time, if there is surplus money after the fixed time, then you get it. As far as tax is concerned, it will be taxed in the same way as in the case of equity and debt funds. Where the holding period is not more than 12 months, the investors will have to pay short-term capital gains tax. If you are investing in a scheme, then you can activate the SWP option in it.

(Based on conversations with AK Nigam, director of BPN Fincap)

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Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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