What Is Swp (systematic Withdrawal Plan)?

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What is SWP (Systematic Withdrawal Plan)?

If investors want regular cash flow from their investments, the automatic and traditional choices, for many, are bank fixed deposits or postal deposits. However, declining interest rates on these avenues have made investors worry about their future income needs. Mutual funds through their schemes also provide an option for investors for such regular cash flows through what is known as SWP or Systematic Withdrawal Plan. One can set up an automatic redemption on a fixed date of every month or quarter on any of your existing mutual fund scheme investments, providing such facility.

What is SWP (Systematic Withdrawal Plan)?

Benefits of SWP:

You end up paying lower tax on the withdrawn amount than you would if the same amount came to you in the form of interest on traditional investment products, such as fixed deposits, postal deposits etc.
SWP is more flexible as it allows you to change the periodic withdrawal to suit your requirements. You can go higher if needed or lower, which might not be the case in some traditional products.
In the case of SWPs, you can decide on how much amount you want to withdraw periodically. However, the amount is not fixed in case of Income Distribution cum capital withdrawal (“IDCW”) pay-out options.
Tax on the IDCW option is levied on the entire cash flow irrespective of gain/loss. At the same time, for SWP, one needs to pay on the appreciated amount for redeemed units only.
TDS is levied on IDCW distribution leading to an added leg of tax compliance which is not the case for SWP as tax incidence is entirely in the hands of the investor.

Kotak Debt Hybrid Fund Historical Returns as of 28th Feb 2022-23

  • Returns less than 1 year is absolute and more than 1 year is CAGR
  • Since Inception date of the fund is Dec 2, 2003. Returns are for Regular Plan Growth Option.
  • Past performance may or may not be sustained in the future.
  • Long term performance:
  • Daily Rolling Returns for last 10 years – Kotak Debt Hybrid Fund
  • Long term performance:
  • Daily Rolling Returns for last 10 years – Benchmark
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