Key Points
Harsh Roongta, Founder, Fee Only Investment Advisers LLP, says if you put your money in an equity mutual fund, in an index fund or an active mutual fund, it grows as the market grows..
It is like a tank where you are withdrawing water and municipal authorities are also putting in water..
Typically, the systematic withdrawal plan involves a predetermined fixed amount mostly monthly, but can be done weekly that can be withdrawn, It actually mimics an income or a pension and therefore it is most relevant for retirees, though not necessarily only for them...
SEBI has changed that definition to income declaration cum capital withdrawal plan because dividend in a mutual fund scheme is a misnomer..
The second major advantage that a systematic withdrawal plan has is that just like a systematic entry plan, a systematic investment plan tends to flatten the fluctuations that happen in equity..
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