Mutual Fund - SWP Can Help You Send Money To Your Family Members

Mutual Fund - SWP Can Help You Send Money To Your Family Members

From personalfn

Nobody likes to be dependent. Financial dependency is even worse!

In life, however, there are times your family members require your financial assistance to address their contingencies. In such a case, giving money in lump-sum isn’t the most helpful approach. Your loved ones might need your help for an extended period of time.

Under such circumstances, you can think of dedicating an SWP (Systematic Withdrawal Plan) to a family member in need. Mutual fund houses have started offering you unique options to transfer money to your family members.

SWP facilitates you to withdraw a fixed sum of money from a mutual fund scheme regularly (say monthly, quarterly, half-yearly and annually) and hold the potential to clock returns on the remaining investments over a period of time.

SIP and SWP have one thing in common: they instil a disciplined approach.  Both of them help you tide over uncertain market conditions.  

SIP allows you to accumulate more units through Rupee-cost averaging. While SWP lets you redeem lesser units to withdraw the same amount at a set frequency.  In both cases, you try to make the best use of market volatility.  

Recently, the 
SBI Mutual Fund launched Bandhan SWP—a unique facility that allows you to systematically withdraw money from your investments with the fund house and transfer it directly to the account of a beneficiary.

How SBI Mutual Fund describes Bandhan SWP? 

"Bandhan SWP defines the relationship between a 'Responsible Giver' (Investor) and a 'Confident Receiver' (Beneficiary). It facilitates a regular payout which the beneficiary can use for monthly sustenance, additional financial support, lifestyle maintenance or recurring expenses."

Briefing the media about this new initiative, Ms Anuradha Rao, MD and CEO of SBI Mutual Fund said, "We believe that using one's own investment corpus to create a tax efficient and regular payout to immediate family members not only provides the financial support to your loved ones, but also makes them confident and financially secure."

"Our endeavour is to bring a behavioral change amongst investors to move from a short-term approach to a wealth creation mindset with a long term orientation, and Bandhan SWP is a step in that direction”, added, Mr Navneet Munot, ED and CIO of SBI Mutual Fund.

More about Bandhan SWP...

Who can be the beneficiary of the Bandhan SWP?

Your parents, spouse, children, and siblings above 15 years, provided they are Indian residents.

Formalities you need to complete…

The beneficiary has to be Know Your Customer (KYC) compliant. Else, the recipient will have to present the verifiable proofs of his/her identity and address.

The recipient will also have to provide proof of identity, wherein the name of the specified beneficiary family member is mentioned—the marriage certificate or birth certificate or Passport to name a few.

If you opt for Bandhan SWP, you will have to get the written consent of the beneficiary, and the beneficiary will have to submit the cancelled cheque or the copy of bank statement.

How long will you have to continue with the plan?

Once started, you will have to continue with Bandhan SWP for atleast 12 months, and the minimum monthly pay-out should be Rs 5,000. 

Should you opt for Bandhan SWP and similar options that other mutual funds might offer in future? 

While the concept of SWP is sound, you can live even without Bandhan and similar SWP options.

Moreover, you should always be mindful of the income tax provisions dealing with the clubbing of income. When you opt for a routine SWP or Bandhan, your potential 
mutual funds returnswon’t be impacted.

This makes Bandhan (and all similar SWPs that potentially might come up) nothing more than a marketing gimmick that tries to emotionally appeal to its investors.


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