What is SIP?
Systematic Investment Plan (SIP) is a highly efficient tool for disciplined investment for attaining rupee cost averaging.
What is SWP?
Systematic Withdrawal Plan (SWP) is a tool that can be used for setting up systematic cash-flows through automated withdrawals.
Benefits of SIP & SWP
- Helps Build long term wealth for Financial Independence.
- Inculcates habit of systematic investments through SIP + seeks to reap benefits from regular cash flows through SWP.
- One-stop solution for goal-based investing.
- Offers wide alternatives of Source & Target schemes to choose based on one’s risk appetite & requirement.
- Eliminates excess unwanted withdrawal due to predefined Monthly SWP limit as a multiple of SIP instalment
What is MITRA SIP?
There are certain features like “MITRA SIP from SBI Mutual Fund” that is a combination of potential wealth creation & systematically reaping benefits of the same and lets investors create a comprehensive financial solution that can be used effectively to plan for investors future goals.
How does MITRA SIP work?
Step 1: Choose an SIP plan based on monthly investment amount
Step 2: Select the tenure of investment.
Step 3: Reap the benefit of monthly withdrawal based on the above 2 parameters after the SIP tenure is completed.
Illustration of MITRA SIP
An Investor making SIP investment in Source Scheme assuming growth rate @ 12% and SWP from a Target Scheme assuming growth rate @8% .
| SIP period | Monthly SIP Amount | Investment Amount | Market value of SIP | Max SWP | Monthly SWP | Market value of investment after 25 years of SWP |
|---|---|---|---|---|---|---|
| 8 | 10000 | 960000 | 1599273 | 1.0x | 10000 | 2228681 |
| 10 | 10000 | 1200000 | 2300387 | 1.5x | 15000 | 2619849 |
| 12 | 10000 | 1440000 | 3191616 | 2.0x | 20000 | 4399152 |
| 15 | 10000 | 1800000 | 4995802 | 3.0x | 30000 | 8139274 |
Lets now Calculate the SIP, SWP values for actual cases.
SBI Blue Chip funds (consider SWP withdrawal at 8%p.a.)
| SIP period | Monthly SIP Amount | Investment Amount | Market value of SIP | Monthly SWP withdrawal | SWP w.r.t SIP |
|---|---|---|---|---|---|
| 8 | 20,000 | 1920000 | 3874672 | 25832 | 1.3x |
| 10 | 20,000 | 2400000 | 4691790 | 31279 | 1.56x |
| 12 | 20,000 | 2880000 | 7538532 | 50257 | 2.51x |
| 15 | 20,000 | 3600000 | 10995621 | 73305 | 3.66x |
SBI Midcap funds (consider SWP withdrawal at 8%p.a.)
| SIP period | Monthly SIP Amount | Investment Amount | Market value of SIP | Monthly SWP withdrawal | SWP w.r.t SIP |
|---|---|---|---|---|---|
| 8 | 20,000 | 1920000 | 3662673 | 24418 | 1.22x |
| 10 | 20,000 | 2400000 | 5474498 | 36497 | 1.83x |
*Since the inception of this fund is from 2011, data only 8 years and 10 years were available.
SBI Smallcap funds (consider SWP withdrawal at 8%p.a.)
| SIP period | Monthly SIP Amount | Investment Amount | Market value of SIP | Monthly SWP withdrawal | SWP w.r.t SIP |
|---|---|---|---|---|---|
| 8 | 20,000 | 5066300 | 3662673 | 33776 | 1.69x |
| 10 | 20,000 | 2400000 | 7933404 | 52890 | 2.64x |
*Since the inception of this fund is from 2011, data only 8 years and 10 years were available.
Thus as we can see it is an excellent tool that can create discipline among investors and assist in goal planning. Currently the facility is available with SBI under the Mitra SIP scheme and the same can be structured with other AMCs as well.
Contact Us to create wealth & become financially independent using in SIP & SWP facility.
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