In this lecture we discuss systematic withdrawal plans. Systematic withdrawal plans are very good for people who are looking for regular income. So, especially these become very useful for people who are retired or nearing retirement. Systematic withdrawal plan is a service offered by mutual funds, which provides investor with a specified amount of payout at predefined interval of time. The intervals can be monthly quarterly half yearly annually etc. A specified amount of payout can be defined by the investor as a number of units to redeem or a specified amount to redeem.

If the investor specifies number of units to redeem, then the units would be redeemed at the nav applicable on that particular day of withdrawal. If the investor specifies the amount to redeem, then the number of units should be reduced as per the nav of that particular day on which the withdrawal is made. Then Verizon requires to specify a particular date on which there is WP would be activated. Like the investor can say every 10th of the month. There should be a withdrawal of hundred units from my mutual fund. One is WP works on one particular mutual fund in which the investor is invested withdraws through as WP are subject to applicable taxes.