A Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount from your mutual fund investment at regular intervals — monthly, quarterly, or annually. It is the mirror image of SIP and is widely used by retirees to create a steady monthly income stream while keeping the remaining corpus invested and growing.
How Does the SWP Calculator Work?
Enter your initial investment, monthly withdrawal amount, expected annual return, and the duration. The calculator shows how long your corpus will last — or how much will remain after your chosen period. If your withdrawal amount is less than the monthly return earned, your corpus can actually grow even while you withdraw.
SWP vs Regular Dividend Option
Before 2020, investors used the dividend option of mutual funds to receive regular payouts. However, dividends are now taxed at your slab rate. SWP is more tax-efficient: only the gains portion of each withdrawal is taxable, not the entire amount. For long-term equity fund investors, the effective tax on SWP proceeds can be very low.
Ideal Withdrawal Rate for a Sustainable Income
Financial planners recommend a withdrawal rate of 4–6% per year for a corpus to last 25–30 years. If your corpus is ₹1 crore earning 10% annually, you can safely withdraw ₹50,000–₹60,000 per month almost indefinitely. Withdrawing more than the monthly return will erode the corpus over time.
Frequently Asked Questions
Is SWP tax-free?
Not entirely. Each SWP withdrawal is treated as a partial redemption. The gains portion is taxable — at 12.5% for long-term equity gains (held > 1 year) or at your slab rate for debt funds. The principal portion returned is tax-free.
Can I set up SWP in any mutual fund?
Most open-ended mutual funds allow SWP. However, funds with exit loads may deduct a charge if you withdraw before the exit load period ends. Check with your fund house before setting up SWP.
What happens if my corpus runs out during SWP?
If the corpus is fully depleted and SWP instructions are still active, the fund house will stop further withdrawals. There is no overdraft or debt created.
What is the minimum SWP amount?
Most mutual fund houses require a minimum SWP amount of ₹500 to ₹1,000 per withdrawal, depending on the fund.