SWP with Annual Increase - SBI Focused Equity Reg Gr

Mutual Fund Investors are aware about Systematic Withdrawal Plan or SWP as it is known popularly. What is SWP and how it works can be read here Mutual Fund SWP: Smart investment solution for cash flow needs and wealth creation . In a normal SWP , generally investors can withdraw a fixed amount at a fixed frequency from their investments. However, we can try another innovative way of doing SWP You can call it SWP with Annual increase or Step-up SWP . The concept is that you can decide to increase the SWP amount annually by a certain percentage / or by a fixed amount. This helps you get higher regular cash flow which helps you spend more in future as the inflation keeps increasing with time. But most of the AMCs do not provide SWP with Annual increase facility through a standard product or feature. Therefore, if you want to use this innovative option, you should submit SWP mandate annually to the AMC by increasing the amount to the extent you want.

You can back test the results, by selecting an equity/ hybrid or any aggressive scheme of your choice, input the lump sum investment and SWP amount, select the to/ from dates, frequency in which you want to draw the SWP amount, the annual increase in SWP amount, etc. You will get the results along with detailed cash flow, returns in XIRR Percentage and the SWP amounts which are transferred to your bank account on the given dates/ frequency. This method of SWP is ideal for investors who want not only a sustainable income from their investments but also wanting to increase their cash flows annually to meet the increasing incomes due to rising inflation. To get the best results from SWP with annual increase, you should start SWP with a moderate amount and increase it by the extent of increase in inflation.