Systematic Withdrawal Plan (SWP)

Hello and Namaste Everyone,

I consume a lot of content related to personal finance these days. This content varies from articles to videos and I'd like to understand some tips and tricks that need to follow. Personal finance is a vast topic and I think the more we learn make us better person in terms of managing our finances. Many people are sharing their journeys to achieve financial freedom and also to generate some sources of passive income. It is good to know how people are doing in this segment and I find a lot of information that I do not know and it is a learning for me. Ultimately I am trying to learn so whatever I like I try to go through it.

It's been a couple of weeks for me doing this and I think this is going to be a longer process for me. I'm happy that at least I'm trying to learn something and that is the goal of this content consumption. Recently I got to know about S W P which is known as a Systematic Withdrawal Plan. I know what is SIP and it is known as Systematic Investment Plan. Both are opposite of each other where as the withdrawal plan is a way through which we withdraw some passive income at fixed intervals. The other one which is self-explanatory known as a systematic investment plan where we invest according to some system in place. Today in this post I'm going to talk about the systematic withdrawal plan only.

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What is SWP?

This is the definition of SWP according to AI. In simple words, this is a process where we can invest money in mutual funds and continue to withdraw at regular intervals. This can also be called passive income because we can withdraw the money at fixed intervals whatever we prefer. For example, if you have invested money in a fund that has been paying a return of 15% annually for the last few years we can expect similar returns in the coming years also but it is not guaranteed. Because the investment is generating a return of 15% if we plan to withdraw 10 or 12% maximum every year then our investment will continue to grow.

SWP stands for Systematic Withdrawal Plan, which is a mutual fund investment strategy that allows investors to withdraw a fixed amount of money from their investments at regular intervals.

Anyone who has some money and wants to make a lump sum investment in any proven mutual fund then this can be a good idea. Nothing is guaranteed in this but if you are putting money in an index fund then the probability of this return is quite high and you will be able to meet your financial goals while withdrawing some amount that is less than the annual return. The point here is not to eat up the money we invested instead take out some part of the returns as regular income or withdraw if we call it while keeping the rest to grow in the mutual fund.

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Many mutual funds can be considered and even on Google, there is a calculator available where you can see more. You can do the calculation according to your plan but again would like to mention that it is only for people who can invest money in one go or you can call it a lump sum. If you are planning to invest monthly then SIP is the only option but in that option, you cannot withdraw because you need to give it time to grow then only you can think about withdrawing it.

Thank you so much
Stay Safe

Posted Using InLeo Alpha