Knowledge Center

Systematic Withdrawal Plan in Mutual Fund


Did you know that mutual funds offer the facility of systematic withdrawal plan? Are you aware of the systematic withdrawal plan? 

As the name suggests, a systematic withdrawal plan allows investors to redeem their investment from their mutual fund scheme in a systematic way. Instead of withdrawing a lump sum amount, an investor can withdraw money through fixed or variable instalments. 

These withdrawals could be done on a monthly, quarterly, half-yearly, or annually basis depending on the investor’s financial requirements. A systematic withdrawal plan provides investors with a regular cash flow from their investments in any mutual fund schemes. 

How Does Systematic Withdrawal Plan Work?

The Systematic Withdrawal Plan (SWP) works exactly opposite of the Systematic Investment Plan (SIP). Under SIP, investors can accumulate their savings, whereas in SWP, they can redeem their investments periodically at the prevailing net asset value.

Investors can choose to either withdraw the capital gains on their mutual fund investments or a fixed amount. The withdrawal amount can be used to re-invest in some other schemes or can be retained by investors in the form of cash. 

SWP works best when investors have financial goals like children’s education and marriage, retirement planning, and more. However, investors can also utilize SWP benefits for various other pay-out requirements. 

Benefits of Systematic Withdrawal Plan 

●      Provides Flexible Withdrawal Options

SWP gives investors the flexibility to choose the amount, frequency, and date according to their needs. When needed, investors can stop the SWP at any point in time, add further investments to the corpus accumulated, or even withdraw money over and above the fixed SWP withdrawals. 

●      Generates Regular Income

SWP in mutual fund investments can help investors to offer a regular cash flow from their investments. Therefore, SWP becomes highly useful for those who are looking for a regular cash flow to meet their expenses.

●      Brings Disciplined Withdrawal Habits

SWP can withstand the volatility of the market. It protects investors from withdrawing large amounts due to panic or fear during market corrections. Furthermore, it also allows to withdraw money even when markets register new highs, thus protecting investors from the impulse to invest more money during boom periods.

●      No TDS (Tax Deduction at Source)

For resident individual investors, there is no TDS on the SWP amount.

●      Liquidity

SWP offers investors more liquidity than other schemes such as fixed deposits, pension plans, and more. It provides money in urgency and maintains easy and excellent liquidity.

●      Rupee Cost Averaging 

SWP assists investors to take advantage when they withdraw their investments due to rupee cost averaging. In the case of SWP where a fixed amount is withdrawn, when markets are high, lesser units are redeemed as compared to the time when markets are low. This averages the returns and helps to protect from the potential losses which might arise if one sells the units during a downturn in the market. This benefit of rupee-cost averaging is not available for redemption done through lump-sum mode.

The phase-wise withdrawal provides investors monthly cash flows and gives their capital a longer time period to multiply 

Who should invest in a Systematic Withdrawal Plan?

Systematic Withdrawal Plan is most beneficial for investors who want to receive a regular cash flow, especially the senior citizens. In addition to this, investors can invest in SWP if:

● They want a regular stream of income

● They are on a sabbatical and need fixed income

● They are looking to start their own business and need extra income to take care of their expenses

● They want to increase their cash flows in addition to salary or business income

A systematic withdrawal plan is a good option that investors can have in their investment plan. Whether you are a newcomer or an experienced investor, SWP can be beneficial to meet your financial goals.

At WhiteOak Capital Mutual Fund, we enable investors to achieve their investment goals by providing insights, solutions, and an exceptional client experience.






The section Knowledge Centre on this website is a platform for WhiteOak Capital Mutual Fund to spread awareness and educate investors about various Mutual Fund products. It should not be construed as an offer to sell nor is a solicitation of an offer to buy units of any of the schemes of WhiteOak Capital Mutual Fund. Figures indicated here are for illustrative purpose only and does not correspond to any live or historical data. The information herein above is meant only for general reading purposes and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.