Total Withdrawn
₹
180 months × ₹20,000
Final Value
₹
Remaining corpus after 15 years
About SWP (Systematic Withdrawal Plan)
Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investment at regular intervals (monthly, quarterly, etc.). SWP is ideal for retirees or anyone seeking regular income from their investments.
How SWP Works
You invest a lump sum in a mutual fund scheme. Each period, a fixed amount is withdrawn by redeeming units. The remaining balance continues to grow based on the fund's returns. If returns exceed withdrawals, your corpus grows; if withdrawals exceed returns, it depletes over time.
Example
Investment: ₹20 lakh at 10% annual return
Withdrawal: ₹20,000/month for 15 years
Result: Total withdrawn = ₹36 lakh, Final value ≈ ₹19.5 lakh
Your ₹20L grows even while providing income, because returns (10%) exceed withdrawal rate (~12% annually of initial corpus for the first few years, then declining).
Updated: October 2026
Note: Actual returns depend on market performance. Each SWP withdrawal may trigger capital gains tax (LTCG/STCG). SWP is tax-efficient compared to dividend options in many cases.
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Frequently Asked Questions
What is SWP in mutual funds?
Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount from your mutual fund investment at regular intervals (monthly, quarterly, etc.). Each withdrawal redeems units while the remaining balance continues to grow. SWP is popular for retirees seeking regular income from their investments.
How is SWP different from dividend option?
SWP gives you control over withdrawal amount and timing. Dividends depend on fund performance and are declared by the fund house (not guaranteed). SWP is more tax-efficient because each withdrawal is part capital (tax-free) and part gains (taxed), whereas dividends are taxed as income. SWP also compounds better as the full corpus works for you between withdrawals.
Will my SWP corpus grow or deplete?
It depends on your fund returns vs withdrawal rate. If returns exceed withdrawals, your corpus grows. If withdrawals exceed returns, it depletes. For example, 10% annual return with 6% withdrawal rate (of initial corpus) will grow the balance. But 8% return with 12% withdrawal will deplete it over time.
What is a safe SWP withdrawal rate?
Financial planners suggest 4-6% annual withdrawal rate (of initial corpus) for long-term sustainability. This accounts for market volatility and inflation. For a ₹1 crore corpus, withdraw ₹40,000-50,000/month. Adjust withdrawals during poor market years to preserve capital. Review annually and increase withdrawals with inflation.
When should I start SWP?
Start SWP when you need regular income (retirement, sabbatical, after selling business). Ideally, invest a lump sum first and let it grow for 2-3 years before starting withdrawals. This gives your corpus a head start. Avoid starting SWP immediately after a market crash; wait for recovery to avoid selling units at low NAVs.
How is SWP taxed?
Each SWP withdrawal has two components: capital (your original investment) and gains. Capital is tax-free. Gains are taxed as capital gains. For equity funds: LTCG (>12 months) at 12.5% above ₹1.25L/year, STCG at 20%. For debt funds: taxed per your slab. SWP is more tax-efficient than dividend because you control the timing and amount of taxable gains.