Ask our experts

  1. Which type of mutual fund should I select for SWP if I want to invest Rs.10 Lakh with 0.833% per month withdrawal for next 10 years? – Puneet

If you want to withdraw 0.833% per month that is Rs. 8330 per month as SWP by investing Rs. 10 Lakh then the mutual fund scheme should generate 10% return. In the current market condition for generating 10% return, you need to invest in pure equity fund but for which you have to carry market risk. You can refer to our Equity Fund Recommendations on page 36.

How long should one wait, to start an SWP out of a fresh MF lumpsum investment? Can one wait for 3-5 years and then start an SWP of around 10%? – Nishchay Mehra

There is no time limit to start SWP from fresh lumpsum investment. 5-years and above would be an ideal time for your investment to grow.

For retired people like me which scheme is better – monthly dividend option or SWP? Kindly explain the difference. – Prasad Vinayak Kulkarni

If you are expecting regular monthly cash flow, then SWP would be the right choice. The main difference between the dividend option and SWP is in the monthly payout amount, which varies in dividend option, while SWP allows investors to fix the withdrawal amount.

The next difference is in taxability of the withdrawal amount.  The dividend income is added to investor’s income and is taxable as per the income tax slab. Unlike dividends, the entire SWP proceeds will not be taxed – only the capital gains portion will be taxed.

What is the difference between Dividend and Growth Plan? Which is the best for new investors like me? – MD Jaffar
Under the dividend option, gains made by the mutual fund scheme are paid out to investors at certain intervals. But in the growth option, gains made by the scheme are re-invested in the scheme instead of being paid out to investors. If your investment objective is to create wealth, then you may choose growth option.

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