BENGALURU: A systematic withdrawal plan (SWP) is where you regularly withdraw a fixed amount of money from a fund. The amount to be withdrawn and the frequency is fixed by the investor. The investors can investors can withdraw their mutual fund investments systematically over a period of time by setting up a SWP with the fund house, according to indiatimes.com.

Form:

To enroll, the investor has to to fill up a SWP form. This can be downloaded from the mutual fund website. Investors are required to use separate forms for different schemes, plans and options.

How It Works:

Let’s look at a hypothetical case, where you invest Rs 10 lakhs and the fund gives a return of 9 percent per annum. Suppose you run a SWP of Rs 10,000 per month,  your funds will last upto 182 months. That means you will be funded for more than 15 years of your needs. In this case, if your annual withdrawal is less than the expected annual rate of return, then the SWP can run to perpetuity.

So if our fund can be expected to give 9 percent return, if you draw only 7 to 8 percent of the invested corpus every year, you can use your one time investment forever.

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