Citation:

Porselvi R, Dr. Meenakshi A. "Systematic Investment and Systematic Withdrawal on Stocks: An Analysis of Profitability" International Research Journal of Economics and Management Studies, Vol. 4, No. 1, pp. 39-44, 2025.

Abstract:

Systematic Investment Plans (SIP) and Systematic Withdrawal Plans (SWP) are popular among retail investors who are interested in saving their hard-earned income to create wealth for their retirement. These two strategies are based out of the Rupee/ Dollar Cost Averaging technique and are being followed for retirement plans. The objective of this study is to throw some light on the returns out of these plans, which will help retail investors. For the purpose of this analysis, four Stocks from the Information Technology Sector, being traded in BSE, namely, Tata Consultancy Services Limited, Infosys Limited, HCL Technologies Limited and Wipro Limited, have been taken and analyzed with the data of four years from April 2020 to March 2024. Extended Rate of Return (XIRR) has been used for the calculation of profitability. Profitability on three strategies, i.e. Lump Sum Buy and Hold, SIP and SWP, have been compared for different horizons of, say, 1 year, 2 years, 3 years and 4 years. Also, the profitability for the same horizon of 1 year, 2 years and 3 years for different periods have been compared. It is observed that there is a wide difference in XIRR for the same strategy for the same stock if compared for different horizons and for different time periods. It is also observed that when the price is in the increasing trend, XIRR for SWP is the highest, and the next highest is Lump Sum Buy and Hold strategy. It also observed that when the price fluctuates more, SIP is beneficial either by reducing loss or by increasing profit.

References:

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Keywords:

Risk mitigation, Dollar/ Rupee Cost Averaging, Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP).