Monday 25 April 2011

What is Systematic Withdrawl Plan (SWP)

This is a commonly used terminology in Mutual fund industry which help Mutual fund investors to redeem or withdraw a specific amount of his money invested  at a pre-defined frequency intervals by giving one time instruction to his AMC or Mutual Fund Company.


This facility helps two categories of investors


1. A investor who want withdrawl at regular internals during his retirement
2. A investor who is not confident about the Equity markets going forward, want to book profits at regular intervals




The SWP Plan results in superior or better returns vis-a-vis Lump sum one time withdrwal as it takes away the very important decision & element of timing the volatile equity markets


Practical Implication of Systematic Withdrawl Plan (SWP)
For a retail investor, who always try to time the volatile stock market can opt for SWP plan which would help him 

  • avoid uncertainties & 
  • would help him avoiding his exit from Mutual funds scheme at the bottom of the markets where most of the retail investors exit due to extreme panic. 
If you like reading this article, kindly read



Regards
Mayank Gupta
Founder
http://www.wealthbazaar.in/


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