Baroda BNP Paribas Mutual Fund has announced the launch of Lakshya SIP, an investment solution that merges the advantages of a Systematic Investment Plan (SIP) and a Systematic Withdrawal Plan (SWP). Geared towards long-term wealth accumulation and consistent monthly earnings, Lakshya SIP is designed to assist Indian investors in attaining financial independence and achieving their financial objectives gradually over time.
Lakshya SIP empowers investors to systematically save for periods of 8, 10, 12, or 15 years by making monthly contributions to any of Baroda BNP Paribas Mutual Fund’s equity-focused schemes.
Upon completion of the preferred SIP duration, the total invested sum is automatically shifted to a hybrid scheme of the investor’s choice, triggering the commencement of a Systematic Withdrawal Plan (SWP) for a steady monthly income.
In order to maximize returns, Lakshya SIP also provides a Top-Up SIP option, which enables investors to gradually boost their contributions. This feature allows investors to expand their investments in line with their growing income.
Systematic Investment Plans (SIPs) enable investors to contribute a consistent amount of money regularly into mutual fund schemes. Conversely, Systematic Withdrawal Plans (SWPs) permit investors to withdraw a set sum of money at periodic intervals from their investments. Put simply, SWPs serve as the inverse of SIPs.
The SIP method helps manage volatility by averaging the cost of purchasing mutual fund units. When the market declines, you acquire more units at a lower NAV, and when the market rises, you purchase fewer units. This strategy evens out your purchasing costs over time, enabling you to navigate market fluctuations smoothly without the need to time the market.
By regularly investing small amounts over an extended period, you benefit from compounding and see an increase in your investment.
SIP offers flexibility in terms of the investment amount and duration, promoting disciplined investing and alleviating financial strain as you can determine the investment amount that suits your budget.
SIPs are utilised for investing, while SWPs come into play when withdrawing from a mutual fund. SWPs allow for a fixed amount to be withdrawn at regular intervals from a mutual fund scheme, eliminating the need to time market exits or redeem investments at a loss during a bear market.
This strategy ensures a steady cash flow for specific financial goals or requirements, and can serve as a reliable source of monthly income in retirement.
By maintaining a withdrawal rate lower than the growth of your mutual fund portfolio, your capital can continue to grow while you receive consistent income.