SIP/SWP Strategy for the long term: When you are in a job today and the kind of lifestyle you are living, can you live such a life when financial uncertainty strikes later in life? If you are thinking about this, then many people may be worried about the same as well. If you want to be saved from the tension of future planning, then plan for it in time. There are many plans or schemes available in the market, one of which is Mutual Funds. In comparison to traditional schemes, if you plan properly in mutual funds, then the financial tension can be reduced to a great extent. Another smart way of long-term financial planning is to first opt for SIP i.e. Systematic Investment Plan and later SWP i.e. Systematic Withdrawal Plan.
What is the SIP+SWP strategy?
You can do your long-term financial planning under the SIP+SWP strategy. In this, when you are in working years i.e. in job and your earnings are so much that you can invest a part of them. To increase your wealth manifold through investment, you can choose the option of mutual fund SIP (SIP Investment). Investing in SIP also gives the benefit of compounding. Whereas when you do not work, you will have to choose the option of a Systematic Withdrawal Plan i.e. SWP (SWP Investment). This is as effective a way to get regular income in your hands as SIP is to increase your wealth. In SWP, you can choose the withdrawal amount and tenure as per your needs i.e. 10 years, 20 years or more. For example, you have to withdraw Rs 50 thousand every month for 25 years or Rs 1 lakh every month for 20 years.
By investing once in SWP, you can withdraw a fixed amount every month. In this, apart from monthly, you can choose the option of quarterly or yearly to withdraw a fixed amount. However, if you want the amount in the form of a pension, the monthly option is best. However, it will depend on the funds generated through your SIP, and how much benefit you can get through SWP.
Therefore, if you accumulate a large fund by investing in SIP in a disciplined manner while working, then you can avail the benefit of the SWP facility on retirement. If you are not able to do SIP, you can also use the funds you get after maturity for this.
