What is an SWP (Systematic Withdrawal Plan)?

An SWP allows you to withdraw a fixed predetermined sum of money from your mutual fund investments on a monthly or quarterly basis, while the remaining balance continues to generate market returns.

Why is SWP more tax-efficient than Mutual Fund Dividends or Fixed Deposit Interest?

In an SWP, each withdrawal consists of both principal and capital gains. You only pay tax on the capital gains component, not the entire withdrawn amount, which makes it far more tax-efficient than interest income taxed at slab rates.

SWP Calculator — Systematic Withdrawal Plan Returns & Monthly Income

How a Systematic Withdrawal Plan (SWP) Works

An SWP acts as the reverse of a SIP. Instead of depositing money monthly, you redeem a specified amount periodically. It is widely considered the ideal tool for retirees and individuals seeking regular passive cashflow.

Regular Cashflow

Create a predictable monthly salary-like income stream directly into your bank account.

Portfolio Longevity

If your withdrawal rate (e.g. 6% p.a.) is lower than your portfolio return (e.g. 10% p.a.), your principal continues to expand.

Tax Efficiency

Only the capital gain proportion of each redemption is taxable, unlike FD interest which is taxed 100% at your highest tax slab.

Full Liquidity

Unlike traditional annuities, you retain 100% ownership and can stop, increase, or withdraw the entire lump sum anytime.

Frequently Asked Questions

What is a safe withdrawal rate for an SWP?

Financial planners recommend a withdrawal rate of 5% to 7% per annum from a balanced or hybrid mutual fund portfolio to ensure the corpus lasts indefinitely.

SWP Calculator