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Depending on your financial situation, you might feel the need for a regular cash flow in your account. Perhaps you are retired, or simply need a source of income without liquifying your investments in one go. If you have invested in an ongoing mutual fund, you can achieve this with a systematic withdrawal plan or SWP in a mutual fund.<\/p>\n\n\n\n
In this article, we will explore how SWP<\/a> works, and how you can make the most of your SWP scheme.<\/p>\n\n\n\n When you opt for an SWP, you periodically receive your own money from your ongoing investment by redeeming some mutual fund units. Meanwhile, you keep gaining from the mutual fund units you still hold.<\/p>\n\n\n\n Thus, an SWP is an effective tool to generate regular income from your mutual fund schemes. At the same time, you earn returns on the units you hold.<\/p>\n\n\n\n Here is an example that will help you understand how a systematic withdrawal plan in a mutual fund <\/a>works.<\/p>\n\n\n\n Suppose you invested Rs. 1 lakh in a fund in July 2021. At the time of purchase, the NAV (net asset value) of each fund unit was Rs. 100.<\/p>\n\n\n\n Number of units you purchased = 1,00,000\/100 = 1,000 units.<\/p>\n\n\n\n Then, you start an SWP where you want to withdraw Rs. 10,000 every month, for the next four months.<\/p>\n\n\n\n Now, to generate Rs. 10,000, your AMC or fund house will redeem a certain number of units, depending on the current NAV. So, your withdrawals will be as follows:<\/p>\n\n\n\n <\/p>\n\n\n\nWhat is SWP Meaning in Mutual Funds?<\/strong><\/h2>\n\n\n\n
How Does SWP Work?<\/strong><\/h2>\n\n\n\n