Mutual Funds · Income planning

What is SWP in Mutual Fund?

SWP (Systematic Withdrawal Plan) is a feature in mutual funds that allows you to receive a fixed amount of money at regular intervals (monthly, quarterly, etc.) from your existing investment. It is widely used by investors above 45 to convert their accumulated corpus into a steady income stream.

Monthly income from mutual funds Designed for post-retirement cash flow Keeps the rest of your money invested

What exactly is SWP (Systematic Withdrawal Plan)?

With an SWP, you instruct the mutual fund to redeem a certain amount or a certain number of units at regular intervals. The proceeds are credited to your bank account. It is the opposite of SIP: instead of putting money in every month, you are taking money out in a planned way.

Fixed, predictable cash flow

You decide how much you wish to receive (for example, ₹15,000 per month) and the date on which it should be credited.

Helps manage monthly expenses

Investment continues to work

Only a small part is withdrawn regularly. The remaining corpus stays invested and can continue to grow over time.

Potential to beat inflation

Fully flexible

You can change the withdrawal amount, pause the SWP, or stop it entirely whenever your needs change.

You stay in control

How does SWP work in practice?

Here is a simple step-by-step view of how a Systematic Withdrawal Plan can support you in your 50s, 60s and beyond:

1. Build or move your corpus

First, you need a mutual fund investment (often in debt or conservative hybrid funds). You can move a part of your retirement corpus here.

2. Decide how much & how often

You choose the withdrawal amount (for example, ₹10,000 or ₹25,000 per month) and frequency (monthly, quarterly, etc.).

3. Units are redeemed automatically

On the chosen date, the fund redeems enough units to pay you the specified amount. You do not have to place manual redemption requests.

4. Money comes to your bank account

The amount is credited to your bank account, similar to a pension or regular income, while the remaining units continue to stay invested.

Illustrative example (simplified):
• Corpus: ₹30,00,000 in a conservative hybrid fund
• SWP: ₹25,000 per month starting next month

Each month, units worth ₹25,000 are sold and paid to you. If the fund earns more than what you withdraw on average, your corpus can sustain for many years. SWP design should always be done carefully with risk and return in mind.

Is SWP right for you?

SWP can be a powerful tool for investors aged 45 and above who are moving from a “wealth building” phase to a “income + preservation” phase.

Post-retirement income

If your salary has stopped or reduced and you want a stable monthly amount for household expenses, an SWP can complement your pension and interest income.

Bridge between 50 and 60

Many investors use SWP to support early retirement, sabbaticals or phased slowdown from full-time work while keeping money growing.

Tax-aware withdrawals

SWP withdrawals are treated as redemptions, and tax is applicable only on gains, not on the entire amount like some traditional products. Tax rules change, so design carefully.

Common questions about SWP

Will my money get finished with SWP?

If you withdraw very high amounts compared to what the fund is earning, the corpus will reduce faster. If withdrawals are planned sensibly, SWP can support many years of income. The key is to choose the right withdrawal rate.

Is SWP guaranteed like a pension?

No. Mutual funds are market-linked. SWP gives you controlled withdrawals, but returns are not guaranteed. It should be planned with your risk tolerance and time horizon in mind.

Can I stop or change SWP later?

Yes. You can modify the amount, frequency or stop the SWP completely. This flexibility is one of the main advantages compared to traditional annuity products.