what is swp in mutual fund
It is Systematic Withdrawal Plan.
This is basically offered in mutual fund investments. If you invest in SWP, you get access to your funds at regular intervals varying from monthly, quarterly or annual withdrawals.
When you opt for a Systematic WIthdrawal Plan, you agree to get payouts on your mutual fund investments at regular intervals and at a predetermined amount. This is all theory but how does it really work? Let me help you understand it in detail with an example.
Let us assume you have opted for SWP where you expect a monthly payout of Rs. 5000.
For you to get a monthly payout of Rs. 5000 regularly, you need to have investments that will generate Rs. 5000. This calculation is done based on the NAV on the date of withdrawal.
For example, if the NAV is Rs. 10, then the required units for redemption of Rs. 5000 payout would be 500 (5000/10) units. All the other remaining units will be invested as it is.
The best part about SWP is that you have the control and flexibility of choosing your own payout and its frequency.
I hope my explanation on what is SWP in mutual fund is clear to you 