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Systematic Withdrawal Plan (SWP)

 

A Systematic Withdrawal Plan (SWP) is a facility that allows an investor to withdraw money from an existing mutual fund at predetermined intervals. The money withdrawn through a systematic withdrawal plan can be reinvested in another fund or retained by the investor in cash.

 

    When is a SWP generally used?

    Systematic withdrawal plans are used by investors to create a regular flow of income from their investments. Investors looking for income at periodical intervals for e.g. funding a travel plan during the childrens' summer vacations, also set up their withdrawals in such a way that the cash is available when most required.

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    What makes SWP a wise strategy?

    • Withdrawals (also referred to as "redemption") attract no Tax Deducted at Source
      Please note that
      Capital Gains Tax will chargeable on the withdrawn amount.
    • SWP can be set up to withdraw only the appreciation made on a particular investment. In this way your capital stays invested while you continue to enjoy the gains periodically.
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    SWP is available in two options:

    Fixed Withdrawal: Where you specify amounts you wish to withdraw from your investment on a monthly/quarterly basis.
     
    Appreciation Withdrawal: Where you can withdraw your appreciated amount on a monthly/quarterly basis.
     
    Post-dated warrants sent to investors are dated 1st of every month.

     

    Investment Plan

    Details SWP - Fixed Withdrawal SWP - Appreciation Withdrawal
    Available Schemes Birla Sun Life Dynamic Bond Fund, Birla Sun Life Gilt Plus, Birla Sun Life Income Plus, Birla Sun life Monthly Income Plan II series 5,Birla Sun Life Government Securities Fund, Birla Sun Life Income Fund. Birla Sun Life Dynamic Bond Fund, Birla Sun Life Gilt Plus, Birla Sun Life Income Plus, Birla Sun life Monthly Income Plan II series 5,Birla Sun Life Government Securities Fund, Birla Sun Life Income Fund.
    Objective Allow investors of growth plan to withdraw fixed amount at regular interval. Allow investors of growth plan to withdraw 90% of the appreciation amount at regular interval.
    Withdrawal option Fixed Amount Appreciation Amount
    Withdrawal amount Min Rs. 500 & in multiples Rs. 1 90% of Appreciation Amount in that month/ quarter, subject to a minimum payout of Rs. 500. If the so derived withdrawal amount is < Rs. 500, no SWP for that month, to be added to next month's/Quarter's SWP amount.
    Frequency of withdrawal allowed Quarterly/Monthly Quarterly/Monthly
    No. of withdrawal (minimum) Quarterly-4/Monthly-6 Quarterly-4/Monthly-6
    Submission of request by Direct credit of SWP 25th of month Available 25th of month Available
    Mode of payment Warrants issued at requested frequency. Warrants issued at requested frequency.
    Termination of request 5 Days Advance request 5 Days Advance request
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Disclaimer

The views, opinions and recommendations mentioned herein are those of the Investment Advisor alone and should not be construed as investment advice to any party and are not necessarily those of Birla Sun Life Asset Management Company Ltd.(BSLAMC) or any of their officers, employees, personnel, directors and further, BSLAMC / its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors make no representation or warranty, express or implied, as to the accuracy, completeness or reliability of the content and shall not be liable for any loss, damage, liability whatsoever for any direct or indirect loss arising from the use or access of such information.

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