SWP VS ELSS: Retirement Income or Tax Savings? Which scheme of mutual fund is best for you? – Swp vs Els Mutual Fund which is better for income and tax saving

Swp vs elss: Everyone wants him to have a regular source of income after retirement. Especially, in view of increasing inflation, medical expenses and uncertainty of jobs day by day. This concern is even more to those who do not get pension after retirement.

In such a situation, it has become very important to have a regular and tax-friendly income source, which can meet your needs after retiring. For this, two mutual fund options are revealed- Systematic Vidrol Plan (SWP) and Equity Linked Savings Scheme (ELSS).

In both these schemes, money is deposited in mutual funds, but the way and purpose of their work is completely different. Let us consider it as details as SWP and ELSS and know which will be more beneficial to invest in.

SWP: Do you want money every month?

Systematic withdrawal plan i.e. Swp is a smart way to withdraw money in mutual funds. With this, you can withdraw a fixed amount every month, every three months or year.

Like if you put ₹ 10 lakh in a fund. You start extracting ₹ 10,000 every month. So the rest of the money will remain in the fund and will continue to get returns on it, but you will also get fixed income.

Why is SWP beneficial?

• In SWP you get fixed income every month, that too without withdrawing all the money.
• You yourself decide how much money and how many times you have to withdraw.
• The money that lives in the fund remains invested and gives returns.
• This bank is more tax friendly than options like FD.
• There is no need to withdraw huge amount or market timing together.
• It is useful for retirement, children’s education or any major expenses.
• If needed, you can stop or change it anytime.

If you have retired, or some extra income along with salary, SWP can prove to be a very useful option. However, you can take the real advantage of SWP only when you prepare a big fund through a systematic investment plan (SIP) or lump sum in mutual funds.

ELSS vs Swp: What are the benefits in which?

ELSS: How to save tax and increase money

Now let’s talk about Equity Linked Savings Scheme i.e. ELSS. ELSS is actually a mutual fund in which at least 80% of the money is invested in the stock market. Its aim is to save tax and increase money in long periods.

In this, you can take exemption under Section 80C of Income Tax on an amount of ₹ 1.5 lakh from all the money you invest in this. However, this exemption is found only in the old tax regimen.

Special things of ELSS

• It is completely connected to the market, that is, there will be ups and downs according to the market, but there is a possibility of getting more profits.
• This fund contains 3 years lock-in. Meaning, you cannot withdraw money before 3 years.
• Money is invested in different sectors and companies, so that the risk is slightly divided.
• You can put as much money as you want, but tax exemption will be available only up to 1.5 lakhs.

You can withdraw money after 3 years from ELSS. If you want, you can gradually withdraw money and make it a kind of SWP, but the real purpose is not income, growth and tax savings.

SWP vs Els: In which money will be put in which it will be right?

The answer to this question depends largely on your need. According to financial experts, if you need- fixed income every month, such as spending after retirement or paying children’s fees, SWP is better. But if your focus is to save tax and increase money in the long term, then ELSS can be more suitable.

This means that both financial tools are good, the difference is just your need. The correct choice depends on your financial goal that you need regular income after retirement, or to prepare a large fund with tax saving.

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