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Monday, August 26, 2013

How to Periodic withdraw from Mutual fund

Under mutual fund scheme, there is an option of systematic withdrawn plan in which the investor can withdraw the periodic redemption according to pre-specified schedule. An investor can choose specified schedule as well as amount to withdraw the amount. This may be called a good option as investor can watch favourable or unfavourable market conditions for investing. These are some points to be noted for systematic withdrawn plan (SWP).

Application form
A separate application form needs to be filled by the investor. All the details including investor name, scheme, plan, option should be filled.

Date
Investor must tell the commencement date of systematic withdraws. Some mutual fund companies take a hold period between investment start date and SWP date. 

Withdraw option
There are two options available under SWP plan.
1- Fixed withdraw in which an investor tells a fixed amount to be withdraw from the investment.
2- Appreciation withdraws in which an investor can withdraw the amount to the extent of capital appreciation.

Statements of accounts
An account statement will be sent to the investor within 10 working days after first withdrawn from the mutual funds for confirming the withdraw. After that statement will be sent on regular quarterly basis.

Capital gain is applicable on SWP and will be charged on redemption.

SWP payment comes either by cheques or direct in bank accounts if registered.

First in first out formula used for redemption in SWP plan.
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