If you wish to enjoy the returns of your savings as an income, opt for SWP. One of the best ways to redeem your funds is to opt for a Systematic Withdrawal Plan. It is one of the best ways by which you can withdraw funds in the same pattern as you invested in them.
There are two major benefits by opting this route:
- You can average the net asset value (NAV) of withdrawal across market conditions. Doing which, you avoid trying to time the market for peak NAVs, which could be a hit or miss proposition.
- You are in a position to minimize the amount of exit load you pay for withdrawal.
Also, if you are continuing to invest or have planned to start investing in SIPs, make sure you invest in those assets that will help you to beat inflation after the completion of the tenor. Otherwise, you will have to take the debt course where you will be forced to take a home loan or any kind of loan to finance your needs later. Instead of getting into such avenues which burden your income, start investing early and wisely.
It is not only important to invest wisely. But equally important is to wisely use your savings especially during post-retirement. If you start withdrawing in equal installments, by virtue of the first-in-first-out method of redemption, you will start by withdrawing the oldest units in the folio which would no longer be subject to exit loads, if you have stopped investing in SIPs with a small term of the tenor left.
Also, a larger part of your capital gains from your withdrawals would be treated as long-term gains (holding period of more than one year), reducing the tax burden.