SWP in Mutual Fund – Invest 1000 Rs | Earn Your Double Profit Monthly – Best 4 Mutual Funds

SWP in Mutual Fund

Among the various strategies available to optimize returns, the Systematic Withdrawal Plan (SWP) stands out as an effective method. By investing a modest sum of Rs. 1000 monthly through a Systematic Investment Plan (SIP) and subsequently channeling these investments into an SWP, investors can enjoy the benefits of regular income. This essay explores the intricacies of the SWP method, its benefits, and highlights four top mutual funds for such investments.

Understanding the Systematic Withdrawal Plan (SWP)

The Systematic Withdrawal Plan (SWP) is a method that allows investors to withdraw a predetermined amount from their mutual fund investments at regular intervals, typically monthly. This strategy is particularly beneficial for those who require a steady income stream, such as retirees or individuals seeking supplementary income.

How SWP Works

1. Investment Phase via SIP:
   • The first step involves investing a small amount regularly, say Rs. 1000, through a Systematic Investment Plan (SIP). Over time, these small contributions accumulate into a significant corpus.
2. Transition to SWP:
   • Once a substantial amount has been accumulated, investors can then start an SWP, wherein a fixed amount is withdrawn periodically. The remaining corpus continues to grow, often earning returns that can potentially double the invested amount over time.

Benefits of SWP

1. Regular Income:
   • SWP provides a consistent and reliable income stream, which is ideal for meeting regular expenses without the need to liquidate a large portion of the investment.
2. Tax Efficiency:
   • Withdrawals through SWP can be more tax-efficient compared to lump-sum withdrawals, as only the capital gains portion of each withdrawal is subject to tax.
3. Flexibility:
   • Investors have the flexibility to choose the withdrawal amount and frequency, tailoring the plan to meet their financial needs.
4. Compounding Benefits:
   • The remaining corpus continues to earn returns, benefiting from the power of compounding over time.

Also Read… Rs 50 Lakh Investment, Rs 70K Monthly Pension for 10 Years

Investing in Mutual Funds: A Case for SIP

Before delving into SWP, it’s crucial to understand the foundation laid by SIPs. A Systematic Investment Plan (SIP) allows investors to contribute a fixed amount regularly into a mutual fund, harnessing the benefits of rupee cost averaging and compounding. This disciplined approach mitigates the risks associated with market volatility, as investments are spread over time.

Best 4 Mutual Funds for SIP and SWP

To maximize the benefits of SWP, choosing the right mutual funds is crucial. Here are four mutual funds that stand out for their performance and suitability for both SIP and SWP strategies:

1. ICICI Prudential Equity & Debt Fund Direct Growth
2. HDFC Hybrid Equity Fund Direct Plan Growth
3. SBI Equity Hybrid Fund Direct Plan Growth
4. Quant Absolute Fund Direct Growth

1. ICICI Prudential Equity & Debt Fund Direct Growth

• Minimum SIP Amount: ₹100
• Fund Returns:
  • 1 Year: 38.6%
  • 3 Years: 25.1%
  • 5 Years: 21.9%
  • All Time: 18.4%

The ICICI Prudential Equity & Debt Fund combines the growth potential of equities with the stability of debt, making it a balanced choice for investors. Its impressive returns over various time horizons highlight its robust performance, making it an ideal candidate for both SIP and subsequent SWP.

2. HDFC Hybrid Equity Fund Direct Plan Growth

• Minimum SIP Amount: ₹100
• Fund Returns:
  • 1 Year: 22.7%
  • 3 Years: 16.2%
  • 5 Years: 16.1%
  • All Time: 16.0%

The HDFC Hybrid Equity Fund focuses on creating wealth over the long term while maintaining a level of stability. Its balanced approach to equity and debt investments has resulted in consistent returns, making it a reliable choice for investors.

3. SBI Equity Hybrid Fund Direct Plan Growth

• Minimum SIP Amount: ₹500
• Fund Returns:
  • 1 Year: 26.8%
  • 3 Years: 14.6%
  • 5 Years: 15.4%
  • All Time: 15.5%

SBI Equity Hybrid Fund is known for its balanced allocation between equity and debt, aiming to provide capital appreciation and regular income. Its solid track record and performance make it a strong contender for a dual SIP and SWP strategy.

4. Quant Absolute Fund Direct Growth

• Minimum SIP Amount: ₹1000
• Fund Returns:
  • 1 Year: 39.7%
  • 3 Years: 21.9%
  • 5 Years: 26.6%
  • All Time: 18.9%

Quant Absolute Fund stands out with its aggressive growth strategy, primarily focusing on equities. This fund has demonstrated exceptional returns, making it suitable for investors willing to take on higher risk for higher potential rewards.

Implementing SWP: A Step-by-Step Guide

1. Start with SIP:
   • Begin by investing a fixed amount, such as Rs. 1000, monthly in one or more of the recommended mutual funds. This regular investment helps build a substantial corpus over time.
2. Monitor and Review:
   • Keep track of the fund’s performance and review your investment periodically to ensure it aligns with your financial goals. Adjust the SIP amount if necessary to maximize returns.
3. Transition to SWP:
   • Once your corpus has grown sufficiently, switch to the SWP mode. Decide the monthly withdrawal amount based on your needs and the fund’s performance.
4. Set Up SWP:
   • Contact your mutual fund provider to set up the SWP. Specify the withdrawal amount and frequency (e.g., monthly).
5. Enjoy Regular Income:
   • Start receiving your monthly withdrawals while the remaining corpus continues to grow and generate returns.

Conclusion

The Systematic Withdrawal Plan (SWP) is a powerful tool for mutual fund investors seeking regular income. By investing a modest sum of Rs. 1000 monthly via SIP in well-performing mutual funds, and then transitioning to SWP, investors can enjoy the benefits of consistent income and capital growth. The four mutual funds highlighted—ICICI Prudential Equity & Debt Fund, HDFC Hybrid Equity Fund, SBI Equity Hybrid Fund, and Quant Absolute Fund—offer excellent opportunities for such investment strategies.