Best Passive Income? Systematic Withdrawal Plan! || bekifaayati #shorts
A systematic withdrawal plan (SWP) is pretty straightforward. You hold an amount in a fund, fix the amount you want to withdraw periodically from this sum, the equivalent number of units are automatically redeemed each time and you get the pay-out.
So, if you have Rs 10 lakh in a fund, you can set up an SWP to withdraw Rs 10,000 every month. The fund will redeem units equivalent to this Rs 10,000 and pay the amount out to you.
SWP is also much more tax efficient than FDs. As with SWP you pay tax only on the gain. The entire withdrawal amount is not taxed. For example, let’s say you hold 1,000 units in fund A, invested at an NAV of Rs 50 (total investment of 50,000). Then in the first month, you withdrew Rs 2,000. The NAV then was Rs 52. So you’d redeem 38.46 units (2000/52). Your cost of these redeemed units is Rs 1923. The gain is just Rs 77, on which you pay tax.
With an FD you pay tax on the interest income. So if you receive interest of Rs 2,000 you will have to pay tax on the entire amount.
#swp #sip #mutualfunds
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