What is a Systematic Withdrawal Plan (SWP)?
A plan that allows you to withdraw pre-decided amounts from your investments in a scheme at periodic intervals. It is advisable to apply for SWP under Income Funds to save on TDS (Tax Deducted at Source). The following example illustrates how the SWAP Option in the HDFC Income Fund – Growth Plan, is more tax efficient as compared to the Dividend Plan in the HDFC Income Fund. Calculation for a Unit Holder who invests Rs.1,00,000 on (October 1, 2000) in the HDFC Income Fund – Dividend Plan. This is assuming that the Unit holder is a taxpayer in the highest tax bracket.
A systematic withdrawal plan is a financial plan that allows a shareholder to withdraw money from an existing mutual fund portfolio at predetermined intervals. The money withdrawn through a systematic withdrawal plan can be reinvested in another portfolio or used to pay for something else. Often, a systematic withdrawal plan is used to fund expenses during retirement. However, this type of plan may be used for other purposes as well. With a systematic withdrawal plan, a fixed or variable amount is withdrawn at regular intervals. Withdrawals can be made on a monthly, quarterly, semi-annual, or annual schedule. The holder of the plan may choose withdrawal intervals based on his or her commitments and needs. Systematic withdrawal plans offer many benefits. For example, systematic withdrawal plans allow account holders to access their money exactly when they need it. This makes it easier for account holders to carry out their financial plans and meet their goals. A systematic withdrawal pl
