Quantum Direct Investor Information Initiative

How to Make Monthly Withdrawals From Your MF Investment Corpus Wednesday, Sep 30, 2020

Yes. It may sound too good to be true.

But it is possible to create a regular, predefined withdrawals from mutual fund investments.

You may be aware of SIPs.

Investing in mutual funds through systematic investment plan (SIP) has become quite popular over the last few years.

‘Systematic Investment Plan’ is usually favored for its systematic approach to investing.

All an investor needs to do with an SIP is invest a fixed sum of money over time, with an objective to build a corpus.

Yes, the SIP in some cases has become almost synonymous with Mutual Funds.

But this article is not about SIPs.

In today’s letter, we reveal a lesser known mutual fund withdrawal strategy.

The ‘Systematic Withdrawal Plan’.

Think of it as something that is just the opposite of SIP.

Systematic Withdrawal Plan (SWP) is a facility offered by mutual funds which provides investors with a specific amount of payout at a pre-determined time intervals, like monthly, quarterly, half-yearly or annually.

In other words, it can give you a pre-defined cash flow, or “withdrawal”, each month.

If you invest regularly and build a corpus that is.

With SWP investors get the option to withdraw a fixed sum of money from a fund at regular intervals, after investing a lump sum amount firstly in the fund.

Simply put, through SWP, an investor invests a corpus first to withdraw a fixed monthly amount later.

If you are a retired person or a senior citizen for example, who is looking for a fixed flow of withdrawal and want to get a monthly amount for daily expenses, this is a great strategy.

That’s great! How do I benefit from an SWP?

The first step is to build a comfortable corpus earmarked to realize your financial goal.

Be it retirement, your child’s education or any other goal it all begins with chalking out a plan of action.

Here are some useful resources on how to build an investment corpus using mutual funds:

✔ Using a Mutual Fund SIP to build a corpus systematically is an excellent and widely popular strategy. Understand how to manage a SIP here...

✔ Start investing as early as possible, and continue to invest as much as possible leading up towards the end of your investment term.

✔ Diversify your portfolio to gain the maximum benefits from the markets.

✔ Protect your portfolio from market movements over the years leading up to the end of your investment term.

✔ Follow some time-tested methods to invest in a disciplined manner.

How does SWP compare with other monthly payout options?

Systematic Withdrawal Plan (SWP) is a facility that is provided by mutual funds to let investors obtain a fixed withdrawal regardless of market situations.

SWPs are also tax-efficient.

Each withdrawal made through an SWP is considered to be a combination of capital and income. Tax is only payable on the income component and not the capital component.

So the next time you are trying to create a reliable withdrawal stream look beyond the obvious.

Editor's note: To know more about SIPs, SWPs or any other investment facilities write to us at CustomerCare@QuantumAMC.com
Or give us a missed call at +91-22-68293807 and we will call you back. We will be happy to assist you.


Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – www.QuantumAMC.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.