Understanding SIP and SWP in Details

Demonetization is an important factor that triggered the need for understanding SIP and the benefits of the same. However, there is still much confusion that revolves around SIP. Even investors who are in the game are still confused about SIP. So, it is essential to understand what is sip? Even now some of the investors believe that SIP is a product. They invest money while thinking that they are investing in a particular product. However, the understanding of the investment in detail is essential for the investor. There is much confusion that revolves around SIP and Mutual funds too.

So, what is SIP?

SIP stands for a systematic investment plan. This is a scheme that helps the investor to make an investment on a systematic basis on mutual funds. This can also be considered as an equity mutual fund scheme. There are several benefits of investing in SIP. This is one of the ways through which financial discipline can be achieved. This is one of the ways through which the investor does not have to analysis the mood of the market which making any investment. SIP is a scheme that can help in the growth of investment over a period of time.

The ways SWP reaps you the benefits

SWP is a systematic withdrawal on the investment made on mutual funds. This is a systematic redemption process in which the withdrawal is done in a systematic manner on the mutual funds rather than someone making a lump sum withdrawal. To understand the benefits of a Systematic Withdrawal Plan it is necessary to understand what is a systematic withdrawal plan? The understanding of SIP helps in knowing the benefits that are being taken out of the systematic withdrawal scheme. SWP can be considered to be an approach that is opposite to SIP.

The schematic withdrawal on SWP

There is a certain risk associated with the investment on SIP. This risk can be minimized with the systematic withdrawal scheme. In SWP a systematic withdrawal is done while channeling the investments with the bank's savings account. The Systematic withdrawal scheme can be one of the strategies through which the market fluctuation can be avoided while making the withdrawal. This is one of the ways through which the systematic withdrawal on the investment can be done over a term period which leads to minimizing of risk associated with the withdrawal which otherwise incurs some risk.