withdrawal plan

Withdrawal Plan

1) A payment structure arranged with a mutual fund in which the investor receives a set amount of funds from the fund on a periodic basis. This is also called a "systematic withdrawal plan".

2) Any strategy in which an investor liquidates a portion of their portfolio and extracts cash periodically, such as an investor selling equity shares every year to help supplement their retirement.

Notes:

1) This type of arrangement with a mutual fund affords the investor an income stream during their retirement years while also maintaining exposure to further growth by keeping their remaining funds invested in the mutual fund for as long as possible.

2) Once an investor has finished the accumulation phase, most generally prefer to structure their spending so that their funds will last for an extended period of time. This can be done by managing a portfolio and periodically selling assets, investing in income-producing securities, purchasing an annuity, etc.

See also: Accumulation Phase, Investment Income, Mutual Fund, Open-End Fund, Redemption, Systematic Withdrawal Plan - SWP

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Withdrawal plan

Agreement that a mutual fund will disburse automatic periodic redemptions to the investor.

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withdrawal plan

An option offered by some open-end investment companies whereby an investor can receive payments at regular intervals. Withdrawal plans are generally used by people who wish to use their accumulated funds for retirement purposes. Also called systematic withdrawal plan.