Latest news with #SystematicWithdrawalPlan
News18
3 days ago
- Business
- News18
Systematic Withdrawal Plans vs Annuities: Features, Risks And Returns Explained
A Systematic Withdrawal Plan, allowing investors to withdraw a fixed amount from their mutual fund scheme at regular intervals, is a flexible investment tool. Systematic Withdrawal Plan (SWP) is a facility offered by companies to mutual fund investors, wherein they can withdraw a specific amount from their investment at regular intervals. Annuities, on the other hand, allow investors to assure sums in products offered by life insurance companies that enable a stable and sustained income flow to build a significant enough retirement corpus. Even after the amount is withdrawn, the SWP model allows the remaining investment in the mutual fund to continue earning returns in the market. It is a flexible option, where investors can choose the withdrawal frequency and amount depending on the changes in the market conditions. In comparison, annuities are less flexible but often preferred by those seeking fixed and secure retirement funds. Here's what you need to understand about both SWP and Annuity before choosing one. Systematic Withdrawal Plan Flexibility: A Systematic Withdrawal Plan, allowing investors to withdraw a fixed amount from their mutual fund scheme at regular intervals, is a flexible investment tool. Here, investors can tailor the frequency and sum of withdrawals as per their immediate or future needs. Customisation: The withdrawal facility in a mutual fund gives investors control over their investment portfolio, including the chance to make adjustments as per their requirements. Tax Efficiency: An investor can structure their withdrawals in the SWP model in such a way as to avoid heavy tax liabilities and get better returns. Market Risk: Despite all the benefits, however, the SWP is not short of risk to withdrawals as investment value can fluctuate with market conditions. Investors may also need active management and understanding of the market to optimise their withdrawals over time. Annuities Guaranteed Income: The annuities offered by insurance companies for retiring individuals provide fixed, regular and guaranteed payments, which can be availed of for life or a pre-described period in the scheme. Protection Against Inflation: Some annuities are capable of preserving the purchasing power of the retiring individual and their income by adjusting financial values to account for inflation in a given market. Minimal Management: Since the insurance company handles all the payouts made, annuities require minimal management upon purchasing. Lower Growth Potential: While accessible and easy to manage, annuities come with lower growth potential than investment tools in the financial market. Inflexibility: An investor can't alter the terms of the annuity scheme or access the lump sum without penalties. They also come with various fees involved, which may reduce the value of the investment. Location : Delhi, India, India First Published: August 07, 2025, 14:38 IST News business Systematic Withdrawal Plans vs Annuities: Features, Risks And Returns Explained Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Mint
25-07-2025
- Business
- Mint
Kotak Mahindra wants to woo India's wealthy with Solitaire banking—Is it worth it?
If you have a crore in the bank, congratulations—you're an affluent Indian. That's the benchmark Kotak Mahindra Bank uses to determine eligibility for its new Solitaire program. For salaried individuals, the threshold is a little lower at ₹75 lakh. Other types of financial relationships also count toward eligibility—such as mutual funds invested through Kotak, or having a loan or demat account—though some adjustments may apply. Once you qualify, the bank is ready to roll out a red carpet of benefits. But are these perks compelling enough to justify locking in such a large sum? Here's a deep dive. What's on offer At the heart of the program is a pre-approved loan of up to 3x the size of your banking relationship, capped at ₹7.5 crore. So, if you have a ₹1 crore fixed deposit with Kotak, you could be eligible for a home loan worth ₹3 crore. While paperwork like property documents is still required, the loan approval process is expected to be smoother. What's more, Kotak considers combined family relationships, which includes your spouse, parents, and minor children. Even better—benefits extend to them. For instance, your father running a traditional grocery business may also enjoy the perks if the family's combined assets meet the eligibility threshold. You also get a credit card borrowing limit starting at ₹10 lakh. Then there is a dedicated customer care helpline only for affluent customers and dedicated 'investment specialists' who will help with investing your money. Also read: How to use credit cards smartly to earn rewards on UPI transactions Kotak is actively promoting its 'SIP + SWP' (Systematic Investment Plan + Systematic Withdrawal Plan), Aspire, as a dynamic retirement strategy, moving beyond traditional insurance policies. This approach leverages SIPs for staggered investments and SWPs for systematic withdrawals, allowing clients to build a robust retirement corpus by benefiting from stock market growth. Explaining this plan, Rohit Bhasin, president, head of affluent, NRI and business banking and chief marketing officer, Kotak bank said combining an SIP and SWP can help the customer define the amount they want to receive every month at a pre-defined age. 'This isn't about retirement alone. The idea is to build a second source of income that this product can help you achieve." Solitaire credit card The biggest highlight of the Solitaire package may well be the Kotak Solitaire Card, a super-premium travel credit card. It's currently free for Solitaire customers—but if your relationship dips below the eligibility level and you're downgraded, a ₹25,000 annual fee kicks in. The card is issued to the primary account holder, with up to three add-on cards for family members. You can earn rewards upto 10% of your spends on flight tickets and hotels booked via Kotak's dedicated platform called Unbox. The platform is also used to redeem the reward points by booking flights and hotels or transferring them to partner airline and hotel partner programs. The bank currently has eight airline partners, including Qatar, Etihad, British Airways etc and two hotel partners, Marriott and Accor. Air India transfers are available at a 1:1 ratio. For other partners, the transfer ratio is 2:1, except for Marriott, which allows transfers to airmiles at a 3:1 ratio. For all other transactions, including travel bookings done outside of Unbox, you will earn 3 reward points per ₹100 spent, translating into 3% reward earning rate. However, payments done towards utilities, insurance, rent, fuel, and education fee are excluded from earning any rewards at all. Notably, Solitaire is one of the few premium cards that will earn reward on tax payments–the 3% base reward apply. The maximum value of reward points you can earn from travel bookings on Unbox is capped at ₹1 lakh per month. To reach this cap, you would need to spend ₹10 lakh solely on travel bookings. Once you hit this limit, a lower base reward rate of 3% kicks in for all subsequent transactions during the month. Also read: Some credit and debit cards come with insurance, but be sure you're eligible for it If you're looking to redeem points on non-travel categories—such as vouchers—each point carries a redemption value of ₹0.5. Frederick D'Souza, business head of credit cards at Kotak Mahindra Bank, said the option to purchase and redeem vouchers directly on the Unbox platform will be rolled out soon. You also get unlimited lounge access, both domestic and international, for the primary and add-on card holders. On top of that, four guest lounge entries per year are allowed—handy for travelling friends or family members who don't hold an add-on card. The perks don't stop at travel. You might get early access to concerts and events, from Ed Sheeran to Peppa Pig. And for foreign usage, there's zero forex markup and just a 1% cash withdrawal fee abroad (no interest if paid on time). So, should you get it? Sumanta Mandal, founder, TechnoFino, an online platform that reviews credit cards and other banking products, said for those who already have a solid banking relationship with Kotak should get the card. 'Since it's free, the customer should get it. It offers unlimited lounge access and has zero forex." But if you don't, it may not be worth locking in a crore just for a card—especially if you're already holding premium offerings from rival banks. 'If you own an Infinia or Axis Magnus Burgundy and don't have an existing relationship with Kotak bank, I wouldn't recommend locking away ₹75 lakh– ₹1 crore just for the credit card," said Mandal. Also read: Mint Primer: Why are banks issuing fewer credit cards?
Economic Times
16-07-2025
- Business
- Economic Times
I earn Rs 1 lakh per month, how can I build a retirement corpus of Rs 4 crore in 12 years?
Getty Images How to build a retirement corpus of Rs 4 crore? I am a working professional, earning Rs 1 lakh per month. The household expenses are taken care of by my husband. I want to build a retirement corpus for myself and currently have Rs 40 lakh in savings. With a monthly income of Rs 1 lakh and 12 years left for retirement at 60, I want to know how I should invest to build a corpus of Rs 4 crore. I also want to know about different investment options like debt and equity. Is there any workshop where I can learn more and clarify my doubts about investments? Please help me plan my investments effectively. Rushabh Desai Founder, Rupee With Rushabh Investment Services: Since your husband is managing the household expenses, you can take risk and opt for equity to invest your entire monthly earnings of Rs 1 lakh and savings of Rs 40 lakh to build a retirement corpus for yourself. Assuming 12% CAGR return in equity for 12 years, an SIP of Rs 1 lakh and lump sum of Rs 40 lakh will give you around Rs 4.78 crore (pre-tax). Hence, you will be able to achieve your retirement goal of Rs 4 crore. Assuming that you will be able to take further risk in equity, you can consider investing in a total of five funds, with one each of growth-oriented flexi-cap fund, value-oriented flexi-cap fund, momentum index fund, contra fund and growth-oriented mid-cap fund. This will help you diversify across different market caps and styles, to help your portfolio generate superior risk-adjusted returns. Remember to keep a buffer period of around a year or two at the end of your time horizon, and redeem only in good market conditions to maintain optimum returns. If you are keen to learn about equity and debt investments, you can consider courses from institutions like NISM, BSE and/or NSE. They have a wide variety of course options to choose from. You can also visit their websites for more information. I work in a private company and invest in mutual funds. My goal is to build a corpus over 20 years and start a Systematic Withdrawal Plan (SWP) when I am 60. To manage market volatility, I plan to shift from equity to debt or fixed-income options before starting the SWP. Which debt fund category or fixed-income instruments are best suited for this purpose, ensuring safety and stability? Also read | I have multiple health insurance policies. How can I split a large claim across different health insurers? Rushabh Desai Founder, Rupee With Rushabh Investment Services: Volatility is an inherent part of equity markets, and there's no reason to be alarmed by it. Historically, markets have gone through phases of correction and recovery, and this current dip is no different. In fact, such corrections offer a valuable opportunity to invest at lower levels, allowing you to accumulate more mutual fund units. When the markets recover and enter a bull phase, these additional units can lead to superior risk-adjusted returns. That's why it's important to view corrections positively. Given your 20-year investment horizon, it's advisable to stay invested in quality equity mutual funds across different market capitalisations. This approach will help you build wealth, beat inflation, and support your post-retirement needs. Over time, especially towards the end of the 20-year period, the impact of market volatility will be significantly reduced. As you approach retirement at age 60, you can gradually shift to a more conservative strategy. Consider hybrid funds within the equity savings category, which typically maintain a 15–25% allocation to pure equity. Alternatively, you can invest in high-quality debt funds from the corporate bond category for SWPs. If you still find the volatility of pure equity funds difficult to handle, you may opt for hybrid funds that follow counter-cyclical or valuation-conscious strategies—typically found in the dynamic asset allocation category. These offer a more balanced approach while still participating in market growth. Ask our experts Have a question for the experts? etwealth@ (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of N.R. 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Business Upturn
15-07-2025
- Business
- Business Upturn
Post Retirement Income Planning: A Guide to the SWP Calculator
Retirement planning is not just about accumulating a large corpus it is also about ensuring that your savings can provide a steady and sustainable income throughout your post retirement years. A Systematic Withdrawal Plan (SWP) offers a structured way to withdraw money at regular intervals monthly, quarterly, or annually from your existing mutual fund investments. It helps turn your accumulated wealth into a dependable income stream without fully exiting the market. To make the most of this strategy, it is essential to calculate how much you can withdraw regularly without depleting your corpus prematurely. This is where an SWP calculator becomes valuable. It helps you estimate sustainable withdrawal amounts, assess how long your funds may last, factor in market assumptions, and understand tax implications allowing you to plan your retirement income with clarity and confidence. Key Takeaways A Systematic Withdrawal Plan (SWP) allows you to convert your mutual fund investments into regular income while keeping your capital invested. An SWP calculator helps estimate how long your corpus may last, based on your withdrawal pattern and return assumptions. Key inputs include your total investment amount, desired withdrawal amount, investment horizon, and expected rate of return. Factors such as capital gains tax and market fluctuations can affect your actual income careful planning is important. Reviewing your SWP plan periodically helps ensure that your funds remain aligned with your financial needs over time. What Inputs Matter Most in an SWP Calculator To get meaningful results from a Systematic Withdrawal Plan (SWP) calculator, you need to enter a few essential details: Investment Corpus : The total amount you have invested or plan to invest in mutual funds. : The total amount you have invested or plan to invest in mutual funds. Expected Annual Return : A realistic estimate based on your portfolio's asset allocation equity, debt, or a combination. : A realistic estimate based on your portfolio's asset allocation equity, debt, or a combination. Withdrawal Amount : The fixed sum you wish to withdraw monthly or quarterly to meet regular expenses. : The fixed sum you wish to withdraw monthly or quarterly to meet regular expenses. Withdrawal Tenure: The number of years you want your withdrawals to continue. These inputs help the calculator estimate how long your investment corpus can support your withdrawal needs, helping you plan with more confidence. Estimating Sustainable Withdrawals for Long Term Retirements Retirement can last 20 years or more, depending on lifestyle and life expectancy. Withdrawing too much too soon may deplete your savings prematurely. An SWP calculator can help you test different withdrawal scenarios and assess whether your chosen amount is sustainable over time allowing you to make informed adjustments early. Choosing an Asset Mix That Supports Inflation Adjusted Payouts Rising prices can reduce the purchasing power of your retirement income. Choosing the right mix of assets can help manage this risk: Equity Funds : Offer potential for higher returns, helping your portfolio grow and keep up with inflation. : Offer potential for higher returns, helping your portfolio grow and keep up with inflation. Debt Funds : Provide stability and relatively lower risk. : Provide stability and relatively lower risk. Hybrid or Asset Allocation Funds: Combine growth and stability, offering a balanced approach. An SWP calculator can help you model these asset mixes and see how they might affect your long term income. Understanding the Impact of Capital Gains Tax on SWP Income Withdrawals through SWP are partially taxable, depending on how long the investment has been held: Equity oriented Funds : Long Term Capital Gains (LTCG) : Gains on units held for over one year may be exempt up to a certain annual limit. Gains beyond that are taxed at applicable rates. Short Term Capital Gains (STCG) : Units held for less than a year are taxed at a fixed rate. : Debt oriented Funds : Capital gains are taxed as per the investor's applicable income tax slab, without indexation. : Some advanced calculators can provide an estimate of post tax income, helping you better assess your net monthly cash flow. SWP vs Annuity: Which Option Works Better? Both options aim to generate regular income in retirement, but they work differently: SWP : Offers flexibility, continued market participation, and potential for higher returns. : Offers flexibility, continued market participation, and potential for higher returns. Annuity: Offers guaranteed income, but usually with lower returns and limited liquidity. Using a calculator to simulate both can help you decide which approach aligns better with your risk tolerance and financial goals. Why You Should Recalibrate Your SWP Plan Annually Retirement is dynamic market conditions shift, expenses change, and tax rules evolve. Reviewing your SWP strategy every year can help you: Adjust withdrawal amounts based on investment performance. Reassess for inflation, lifestyle changes, or tax implications. Keep your retirement plan sustainable and aligned with your financial needs. A flexible SWP calculator lets you model different outcomes and refine your approach over time. Conclusion A Systematic Withdrawal Plan, supported by a reliable calculator, empowers you to manage your retirement income thoughtfully. It helps you strike a balance between withdrawing regularly and preserving your capital, giving you peace of mind and financial independence. With disciplined planning, realistic assumptions, and regular reviews, SWP can become a cornerstone of your post retirement strategy. FAQs Q1. What does an SWP calculator do? It helps estimate how long your mutual fund investments can support regular withdrawals based on your corpus, withdrawal amount, and expected returns. Q2. Can SWP payouts be adjusted for inflation? Yes, you can gradually increase your withdrawals to keep up with rising costs, depending on your fund's performance and remaining corpus. Q3. Are SWP withdrawals taxable? Only the capital gains portion is taxable. Equity and debt funds are taxed differently depending on the holding period and type of gains. Q4. Is SWP better than annuity for retirement? SWP offers flexibility and market participation, while annuities provide fixed income. Each has pros and cons, comparing both helps identify what suits your needs. Q5. How often should I review my SWP plan? At least once a year or when your financial situation or market conditions change significantly. Ahmedabad Plane Crash
Hindustan Times
05-06-2025
- Business
- Hindustan Times
Buying a house in your 40s or 50s: Which is the smarter financial move?
A Reddit post by a 53-year-old who lost his job has sparked discussion about the ideal time to buy a home. He shared that he purchased a ₹2 crore house seven years ago without taking a loan. Now, even after losing his job, he lives stress-free by relying on a Systematic Withdrawal Plan (SWP) to cover his expenses. His advice: don't rush into homeownership in your early 40s. Instead, take calculated risks, explore better career opportunities, and focus on building a solid financial foundation through investments. 'There's no need to hurry. Don't fall for FOMO,' he cautioned. The Reddit user compared his situation to a friend who bought a home 15 years ago and is still paying EMIs. His advice to younger people is to focus on saving, investing, and taking career risks instead of rushing to buy a house too early out of fear of missing out. "Don't rush into buying a house in your early 40s. Take risks, explore better job opportunities, and focus on investing as much as you can. Once you've built a strong financial base, then consider buying a home," the post said. "Life is meant to be enjoyed, not just spent repaying EMIs and loans. Yes, owning a home is important, but there's no need to hurry. Don't fall into the trap of FOMO," the post read. Others, however, are of the opinion that by the time you're 55, a home is more for your children than for yourself. Also Read: Key considerations for first-time homebuyers: Netizens say watch out for black mold and noisy open kitchens Reddit users agree that building a financial corpus is crucial when planning to buy a home. One user shared that they bought their first flat at 30 and repaid the loan within five years. They later purchased a second flat at 37 and are now working to clear that loan within two years. 'I'm earning decent rental income from my first property,' the user noted, emphasizing how early investments can yield long-term financial benefits. Another user highlighted that the value of homeownership goes beyond just utility. 'What about the emotional and legacy value a home provides?' they asked. For those who can afford it or are willing to take little risk, they argued, buying a home is worth it. 'At 55, the house is for your kids, not for yourself,' they said. Also Read: From Sholay to Bengaluru South: Can a name change revive Ramanagara's real estate market? Financial advisors say that the decision to buy a home depends on several personal and financial factors. 'People buy homes in their 30s or 40s, but some do it even in their late 50s. A lot depends on when you settle down, get married, and have children,' Suresh Sadagopan, a financial advisor, said. Family needs and the desire for stability, especially related to children's education, often influence the timing of a home purchase. Buying a home too early in one's career can create challenges. Limited budgets may force buyers to settle for smaller homes or locations far from the city centre, which may not be ideal in the long term. 'EMI planning is also critical,' Sadagopan advised. If both partners are earning and sharing the EMI, it works well. But in cases where the loan burden is high, say, for a ₹2.5 crore property where the couple contributes ₹50 lakh from savings and pays ₹70,000–90,000 each per month, it can become risky. 'If one person loses their job, the pressure becomes immense,' he said. Expensive properties also come with additional costs like stamp duty, registration, furnishing, and brokerage, which often are not recoverable. He advised homebuyers to exercise caution, especially when making big-ticket purchases. 'Don't try to do everything at once. You can furnish your home gradually over two to three years,' he said. He outlined two common approaches to homebuying. One involves purchasing an entry-level home early and upgrading later by building equity; the other is to wait, save diligently, and buy a dream home in one go. 'For those who struggle with financial discipline, buying early and leveraging equity for an upgrade later may be the smarter choice,' Sadagopan added.
