Skip to main content

Mutual Fund Fixed Redemptions has an edge over FDs and MF dividends

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)


Most investors are familiar with SIPs, an option that allows investing a manageable sum of money over the long term. However, not many plan on how they would want to receive money at the time of distribution or redemption. Many are not sure what to do with the lump sum received during redemption. This is the time to think about a systematic withdrawal plan (SWP). SWPs are also more tax efficient in case of withdrawals from debt-oriented mutual funds in comparison to dividend options and bank fixed deposits (FDs).


What are SWPs?


SWPs allow investors to redeem a fixed amount of their investments from their mutual funds on a pre-determined frequency. The amount withdrawn can be used to meet planned and unplanned expenses as well as to re-invest according to an individual's life stage/asset allocation plan.


SWPs are primarily of two types:


Fixed withdrawal: Investors need to specify the amount they want to withdraw from their investments on monthly, quarterly, half yearly or yearly basis. For instance, to pay the daughter's monthly tuition fees (a fixed amount for any particular year), an investor could opt for a monthly SWP with the required amount payable before the tuition fee date.


Appreciation withdrawal: Investors can choose to withdraw only the appreciation amount on the investment which will vary, based on the amount of appreciation and keep the capital intact. This is useful for investors who want to book profits on their investments. For instance, an investor with a portfolio of Rs 10 lakh in an equity mutual fund may want to book profits on every 10% gain in the portfolio. This appreciation can be used by the investor for his planned/unplanned needs and/or park the profits in safer investment avenues such as liquid funds or even pay off his home loan EMI.


Investors can combine an SWP with a systematic transfer plan (STP) to gain further advantage. STPs allow investors to transfer a predefined amount on a specified date from one particular scheme to another by giving a onetime instruction to the fund house. Through STP, investors can transfer funds received from equity schemes — via SWP — to debt schemes or money market schemes, or vice versa.


Benefits of SWPs


Inculcates discipline: A disciplined approach is one of the key requirements for any long-term financial success. Investors who receive lump sum money at the distribution stage may end up spending or mismanaging their funds. SWP ensures one receives the amount in parts rather than the whole so that the spending is planned effectively.


Customise outflows: For regular income, most investors look at the dividend option of mutual funds. However, these schemes offer no assurance of paying dividends in terms of amount as well as intervals. For instance, an individual needs Rs 10,000 per month on a particular date, but the date and amount of the dividend to be declared may not match the individual's requirement. Here, investors can use SWPs to customise their requirement.


Tax efficiency: Tax efficacy is another key advantage of SWPs which gives them an edge over other more popular options like dividends from debt mutual funds and returns from bank FDs. Mutual funds have to pay a dividend distribution tax (DDT) of 28.33% (effective June 1, 2013) on dividends declared by debt mutual funds. FDs are taxed according to the individual's income tax bracket at source (30.9% at the highest tax bracket). Compare this with SWPs where incidence of taxation only occurs on the capital gains portion of the units redeemed at 10.3% without indexation and 20.6% with indexation.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...
Read more

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...
Read more

L&T Long Term Infrastructure Bond 2012 Tranche 2 Application Forms

Application form for Tax Saving Long Term Infrastructure Bond     L&T Long Term Infra Bond Application form     Submit filled up application     Collection canter near you     --------------------------------------------- Invest Tax Saving Mutual Funds Online Mutual Funds Online   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   ---------------------------------------------   How to apply to PFC Bonds? Apply for PFC Tax Free Bonds forms below Download PFC TAX Free Bond Application Forms Submit the filled up form to Collection canter near you How to apply to NHAI Bonds? You can download the NHAI Tax Free Bonds forms below Download NHAI Tax Free bond Application Forms Submit the filled up form to Collection canter near you        
Read more

UTI Equity Fund Invest Online

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Equity Fund   Invest Online UTI Equity is a large cap-oriented fund with assets under management worth Rs. 2,269 crore (as on June 30, 2013). The fund was originally launched in May 1992 as UTI Mastergain and is benchmarked against S&P BSE 100. A couple of years back the name of the fund was changed to UTI Equity Fund and many of the smaller funds of UTI were merged into this fund. Performance The fund has outperformed its benchmark as well as the equity diversified category average in the last one-, three- and five-year periods. It has repeated the same in 2013 (as on May 31). Since its inception the fund has delivered an impressive 26 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. Y...
Read more

Changing the scheme preference in NPS

The NPS allows subscribers to choose the pension fund schemes in which they would like their contributions to be invested, as well as the pension fund manager who will manage their money. Subscribers can indicate their preference by mentioning the ratio in which their contribution will be invested in equity, corporate bonds and government bonds. They can also change this preference if they wish to do so. Here's how to go about it. Active vs auto As an alternative to choosing fund schemes, the NPS offers an auto choice where the proportions are pre-decided based on the age of the subscriber. The ratios cannot be modified in the auto choice, without changing the mode to active. Corporate If the subscriber is investing in the NPS through his corporate employer, the employer should offer all the options that the subscribers can choose from to change their preference. Physical form A form, UOS-S3CS-S3, has to be filled in and submitted to the PoP-SP through which the NPS account was ope...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now