Investment Tips: What is the difference between SIP and SWP? Which one will be more beneficial? These are the 5 best SWP mutual funds

SIP vs SWP: Both SIP and SWP are investment methods related to mutual funds, but they are used for different purposes. To invest in mutual funds, you can choose methods like SIP and SWP.

Swp or sip which is better in india: If you want to invest in SIP, you can start it with just Rs 500 per month.

If you want to invest in the market, but are afraid of taking risks due to market fluctuations, then you can take the path of mutual funds. To invest in mutual funds, you can choose methods like SIP and SWP. To understand the difference between these two, let us first know what SIP and SWP are and what are their benefits.

What is SIP? (What is SIP Investment)

SIP means Systematic Investment Plan. Through this, investors invest small amounts in mutual funds from time to time instead of a lump sum amount. In this method, a fixed amount can be deposited in the selected mutual fund at a fixed interval. Under this scheme, investors can invest daily, monthly, quarterly or at any frequency of their choice.

Benefits of SIP

1. There is no need for a large capital for investment

If you want to invest in SIP, you can start it with just Rs 500 per month. When you want to increase the investment amount, you can increase it as per your convenience.

2. Flexibility is available

You can invest in SIP on a monthly, quarterly or half-yearly basis as per your wish. At the same time, if you face any financial difficulty, you can also stop it for some time in between. That is, you get flexibility in this plan.

3. Benefit of compounding

You get the benefit of compounding in SIP. That is, you get a return on the return you get on your investment. Apart from this, an annual average return of about 12 percent is available in SIP. Sometimes this return is even more than this. In such a situation, through SIP, you can create a good fund in the long term.

4. Teaches savings and financial discipline

Through SIP, you learn to save. Whatever money you have to invest on monthly, quarterly or half-yearly basis, you save that amount and do not spend it. In this way, it brings financial discipline in you.

What is SWP? (What is Systematic Withdrawal Plan) 

Through Systematic Withdrawal Plan (SWP), investors can withdraw a fixed amount from Mutual Fund Schemes at fixed intervals. Investors themselves decide how much amount to withdraw in what time period. They can choose the option of withdrawing a fixed amount on monthly or quarterly basis. However, its monthly option (Regular Monthly Income) is more popular.

SWP is very useful in retirement planning. It is very helpful for those who want regular income from their investment portfolio. That is, this plan is very good for those who need regular cash flow. Experts say that this plan is good for retired people or people who are close to retirement can also think about it. That

is, while SIP is used for investment, SWP is used for withdrawal from mutual funds.

Advantages of SWP:

1. Source of regular income

It helps in providing regular cash for the specified goals or needs. Hence, it can also work as your monthly income source during retirement.

2. Continuity of investment

Even when you withdraw funds, the remaining investments can still grow. This balance ensures that you can continue to generate income while keeping your investment portfolio active.

5 Top Performing SWP Mutual Funds in India (5 Best SWP Mutual Funds in India)

1. HDFC Hybrid Equity Fund

2. ICICI Pru Balanced Advantage Fund

3. SBI Magnum Balanced Fund

4. Aditya Birla SL Balanced Advantage Fund

5. DSP Equity & Bond Fund - Direct Growth

(This is just general information. Please seek expert advice before making any investment.)