Making money while you sleep has a beautiful ring to it. What a beautiful dream it is to earn money while travelling or spending time with closed ones?
Yes dreams do come true with Passive Income!
It is a very simple way where you either need to invest a good amount of money to earn & maintain returns or decent time with little money to create & develop sources of passive income. The love for Brand & Status has everyone finding ways to passive Income .
One of the simple ways of generating passive income is Investments. It not only enables cash inflows but also increases the value of investment with time. Some of the modes of investing are Fixed Deposit, Real Estate and Stocks with intention to earn interest, rentals & dividends respectively.
However, as it is rightly said one size does not fit all. Every investor might not have enough funds to invest in Real Estate. Also, every investor might not have risk capacity or knowledge to invest in stocks. In such situations Mutual Funds Systematic Withdrawal Plan (SWP) come to the rescue of investors.
How does SWP work?
Interestingly, it works completely in the opposite way. An investor needs to identify the requirement & frequency of passive income first & accordingly determine the investment amount. The investment amount shall be invested in a fund & the fund shall be intimated about the systematic withdrawals Although the corpus reduces by that fixed withdrawal but the rest of the amount continues to accumulate to earn interest, what better can it be!
Let us understand with help of an example. Suppose Ms. Rhea has a monthly requirement of ₹40,000 a month for almost 9 Years then it should invest ₹30 Lakh in a Fund with 10% expected average return p.a.
Passive income through SWP comes with a lot of advantages. Some of which are listed below:
- Definite regular Income:
As compared to mutual funds dividends there is certainty of quantum & receipt of income - Risk Appetite:
An amateur investor with low risk appetite should opt for SWP from Mutual Funds as compared to investing in Stock Market - Control over investments:
The initial corpus required to invest depends on amount of passive income & tenure for which it is required - Taxation:
Tax is attracted only on the capital gain amount & not on the corpus
However, before one plan to earn through SWP keep in mind the following points:
- Corpus:
A need for decent corpus investment is required to earn regular passive income - Depletion of Units:
More units are withdrawn during economic down turn, as with fall in NAV, more units shall be required to meet the fixed amount
Ideally it is suitable for an individual who doesn’t have regular income or primary income is not sufficient. You might be thinking it’s tiresome to get started with SWP. But to your surprise, it’s as simple as a click. Start your passive Income today through SWP on Finbingo. In just a few clicks you shall be ready!