Invest in mutual funds like this. Apart from the monthly salary, you will earn this much, know where, how and how much to invest

Business News Desk, You can get regular income from a special facility of mutual fund houses. The name of this facility is Systematic Withdrawal Plan (SWP). How does it work, who can avail it, what is the process to avail it? Let us try to know the answers to these questions. Through SWP you can set a schedule to withdraw a fixed amount from your investment account at regular intervals. Regulator interval means every month, every quarter and once a year. The investor can choose any one of these as per his need.

Very useful for retired people

If you regularly invest in any mutual fund scheme through SIP, then in the long run a big fund is created for you. After retirement, you can withdraw money from this account regularly to your bank savings account through SWP facility. Thus, the SWP facility is very useful for those who are retired. It can also be used by people who want to deposit a specific amount in their bank account for a specific purpose.

Monthly, quarterly or annual withdrawal options

To use the SWP facility you have to inform the mutual fund house. They would like to know from you how much money you want to transfer to your bank account every month or every quarter. It is important to note that the withdrawal rate you choose should be lower than the growth rate of your funds. If this does not happen then your total deposited money will soon be exhausted.

Advice to withdraw 4-6% return amount every year

Experts say that if you do not want your capital amount i.e. the money deposited in the mutual fund scheme to be exhausted soon, then you should withdraw 4-6 percent of your money every year through SWP. Once the SWP is setup, the money will start transferring from your mutual fund account to your savings bank account at the interval you specify.

Redemption of units on FIFO principle

SWP redemption in mutual funds is on the principle of first-in-first-out (FIFO). This means that the units allotted to your mutual fund account are redeemed first. Capital gains of more than Rs 1 lakh in a year are taxed at 10 per cent. SWP can be used to get regular income from your invested money.