SWP

A Systematic Withdrawal Plan is the mirror image of a SIP — you instruct your mutual fund to redeem a fixed rupee amount (or a fixed number of units) on a set date each month and credit it to your bank account. It is the standard way Indian retirees convert a mutual fund corpus into monthly income, and it is also used by working-age investors who need predictable cashflow from a parked lump sum.

Suppose you retire with ₹1 crore in a balanced hybrid fund and set up a ₹60,000 monthly SWP. If the fund returns ~10% annually, the corpus would fund roughly ₹60,000/month for 25+ years — longer than an equivalent annuity at 6.5%, because the remaining balance continues to compound. The flip side is sequence-of-returns risk: a 30% market fall in year 1 combined with fixed withdrawals can permanently damage longevity.

Taxation is favourable: each withdrawal is treated as a redemption, taxed only on the gain portion, not the principal — so effective tax is far lower than FD interest. Equity SWP benefits from LTCG rules (12.5% above ₹1.25L/year after 12 months).

Open our SWP calculator to stress-test a withdrawal rate across different return and inflation assumptions before locking in the amount with your AMC.