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Bandhan SWP by SBI Mutual Fund – Investment Solution for Family

Given the compulsions of today’s day-to-day life, one in general finds it difficult to manage work and family life. The commitments at work or business front, at times results in loss of lack of time for our commitment towards the family members, especially more so when they are completely dependent on us for their financial needs.

Take for instance, Mr. X has worked hard to ensure that he and his family is financially secured. Today his parents who are retired and his child who is completing his higher studies depend on him for their regular financial needs. However, Mr. X even though having the money at times fails to share the same with his loved ones owing to paucity of time.

Even otherwise, in some cases if not most, the elderly parents and the earning member find themselves in a rather awkward (embarrassing) situation wherein either of them have to ask or remind each other for money on a regular basis.

Perhaps keeping in mind various such situations and others, SBI Mutual Fund has come up with first of its kind unique financial solution for the loved ones – SBI Bandhan SWP. The objective of this facility is that an individual can ensure regular cash flows from mutual fund investments to his/ her loves ones without any hassles.

What is this Bandhan SWP?

First let me explain in brief what is SWP (Systematic Withdrawal Plan) - is a facility wherein an investor can avail regular cash flows from his/ her investments at pre-set frequency.

SBI Bandhan SWP – this better’s the SWP facility to the extent that now using the same, an investor can provide regular cash flows to his/ her immediate family member by directly linking the beneficiary’s banking account with his/ her investment account. The beneficiary can be parents, spouse, child or sibling above the age of 15 years. This facility can be availed for investment done in any of SBIMF’s eligible open-ended schemes.

Benefits of Bandhan SWP

Commitment: The investor commits to the financial independency of his/ her loved ones. The direct-to-bank credit facility ensures that cash flows are directly credited to the beneficiary’s account in a time-bound manner.

Self-esteem: Elderly parents can hold high their self-esteem as they don’t need to remind or keep asking money from their children.

Financial freedom: Children or siblings pursing higher/ professional studies will also mature in handling their finances in a better manner, as they learn to manage the same within the set cash flows in their bank account.

Win-Win situation: One of the most notable advantage of Bandhan SWP is that while the investor takes care of his/ her financial commitment towards his/ her loved ones, the remaining invested capital is positioned for possible capital appreciation – thus creating a win-win situation for the investor.

Tax efficiency: As proposed in the Budget 2018, 10% LTCG will be applicable for capital gains over and above Rs. 1 lakh per annum. So in case, where the investor opts for SWP – the investor will have to pay tax only on the corresponding capital gains made on the redeemed number of units. For e.g. If the investor redeems 100 units for an ABC amount, then the capital gains would be the sell price of the 100 units – cost price of the 100 units. If the cost price of the 100 units was Rs. 50,000 and the sell price was Rs. 60,000, then Rs. 10,000 will be the capital gains in this case.

How does it work?

Taking the example of Mr. X mentioned above, who has to provide regular cash flows to his parent or child. Bandhan SWP works in the following three steps:

Step 1: Mr. X invests a lumpsum amount in growth option of eligible open-ended SBI mutual fund scheme.

Step 2: Mr. X fills up the Bandhan SWP Form specifying beneficiary details, withdrawal amount, duration and other details.

Step 3: He submits beneficiary documents (like Proof of Address and Proof of Identity) confirming relationship and bank account proofs.

That’s it. Inflows will start flowing into the beneficiary’s account on respective dates. The important thing to note is that an investor can activate only one Bandhan SWP facility from his/ her one folio. For multiple beneficiaries, the investor will have to create multiple folios.

Now, this indeed seems to be a smarter way to manage finances for your loved ones. So, while you work hard in the first place to generate wealth, you can continue to concentrate on your work and other important aspects of life, while unique facilities like Bandhan SWP ensure that you have taken care of the financial needs of your family members.

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