Outlook Money
SWP is an option given by mutual funds. Here, investors can withdraw a fixed amount of money at regular intervals, monthly, quarterly, or annually. This way, the rest of the investment keeps growing. SWPs offer a structured income flow as opposed to a lump sum withdrawal.
SWPs are a good plan for retirement because of many ways, one such include regular income. SWPs have a fixed payout that helps the retired person with his or her expenses without delays.
Other reasons include flexibility in the SWPs to customize the withdrawal amount. It also includes tax efficiency and capital preservation. An SWP helps one to preserve capital and it simultaneously provides one with a regular income stream.
In order to plan with SWPs, one must evaluate expenses, choose the correct mutual funds and expert advice for the amount withdrawn as it should be congruent to spending power while also ensuring that capital is intact or increases over time.
Another essential thing to keep in mind in order to plan retirement with SWPs is planning for inflation. Re-investing in surplus income and keeping track and revising.
Important considerations include over-withdrawal and tax implications.
Compiled by Syed Muskan