Wealth Creation through SIP and Financial Independence through SWP

Wealth Creation through SIP and Financial Independence through SWP

Review

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 periodMonthly SIP AmountInvestment AmountMarket value of SIPMax SWPMonthly SWPMarket value of investment after 25 years of SWP
81000096000015992731.0x100002228681
1010000120000023003871.5x150002619849
1210000144000031916162.0x200004399152
1510000180000049958023.0x300008139274

Lets now Calculate the SIP, SWP values for actual cases.

 

SBI Blue Chip funds (consider SWP withdrawal at 8%p.a.)

SIP periodMonthly SIP AmountInvestment AmountMarket value of SIPMonthly SWP withdrawalSWP w.r.t SIP
820,00019200003874672258321.3x
1020,00024000004691790312791.56x
1220,00028800007538532502572.51x
1520,000360000010995621733053.66x

 

SBI Midcap funds (consider SWP withdrawal at 8%p.a.)

SIP periodMonthly SIP AmountInvestment AmountMarket value of SIPMonthly SWP withdrawalSWP w.r.t SIP
820,00019200003662673244181.22x
1020,00024000005474498364971.83x

*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 periodMonthly SIP AmountInvestment AmountMarket value of SIPMonthly SWP withdrawalSWP w.r.t SIP
820,00050663003662673337761.69x
1020,00024000007933404528902.64x

*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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