SWP (Systematic Withdrawal Plan) – A Smart Way to Get Regular Income from Your Investments Systematic Withdrawal Plan (SWP) is a flexible investment feature offered by mutual funds that allows investors to withdraw a fixed amount of money at regular intervals—monthly, quarterly, or annually—from their mutual fund investments. It is especially useful for individuals who want a steady income stream while still keeping their capital invested for growth. Unlike lump sum withdrawals that can disrupt your investment strategy, SWP helps in managing cash flow needs systematically, while allowing the remaining corpus to continue growing in the market.
✅ Regular Income Stream – Ideal for retirees, freelancers, or anyone needing fixed periodic payouts
✅ Capital Appreciation – Unused funds stay invested and continue to grow
✅ Tax Efficiency – Only capital gains are taxed, not the entire withdrawal amount (especially in equity funds)
✅ Customizable – Choose how much and how often you want to withdraw
✅ Protects Against Market Volatility – Avoid withdrawing lump sums in market lows
✅ Ideal for Post-Retirement Planning – Convert a lump sum into a reliable monthly income without annuity constraints
Let’s say you have invested ₹10,00,000 in a mutual fund. You opt for an SWP of ₹10,000/month:
Every month ₹10,000 will be credited to your account
Remaining units stay invested and may appreciate depending on market performance
Your corpus lasts longer and gives you flexibility with better returns than traditional instruments
In equity mutual funds, withdrawals after 1 year are taxed at 10% on gains exceeding ₹1 lakh/year (LTCG)
In debt mutual funds, gains are taxed as income based on your tax slab after April 1, 2023
You do not pay tax on the entire withdrawal, only on the capital gains portion
Retired individuals looking for monthly income without exhausting their capital
Business owners or freelancers with irregular income
Parents planning for child education expenses at fixed intervals
Investors wanting to fund EMIs or lifestyle expenses from their investments
