What is a Systematic Withdrawal Plan?
An SWP is the opposite of a SIP. Instead of putting money in every month, you take a fixed amount out. The rest stays invested, so it keeps growing while you draw an income. Retirees use SWPs to create a pension-like income, and others use them to fund fees, rent or EMIs from a lump sum.
How to use the SWP calculator
- Total investment: the lump sum invested in the fund.
- Withdrawal per month: the income you want.
- Expected return: the average yearly return you expect from the fund.
- Time period: how many years you plan to withdraw.
Worked examples
| Investment | Monthly withdrawal | Return | Period | Withdrawn | Left at end |
|---|---|---|---|---|---|
| ₹5,00,000 | ₹10,000 | 8% | 5 years | ₹6,00,000 | ₹5,218 |
| ₹10,00,000 | ₹8,000 | 8% | 20 years | ₹19,20,000 | ₹1,08,965 |
| ₹20,00,000 | ₹15,000 | 10% | 20 years | ₹36,00,000 | ₹26,81,111 |
In the last example, the investor withdraws ₹36 lakh over 20 years and still has ₹26.8 lakh left, because withdrawals (9% a year) stay below the fund's 10% return. By contrast, withdrawing ₹10,000 a month from ₹10 lakh at 8% runs out in about 13½ years.
SWP vs FD interest for regular income
- Tax: FD interest is fully taxed at your slab rate every year. With an SWP, only the gain part of each withdrawal is taxed, as capital gains, often at lower rates. See the capital gains calculator.
- Growth: the invested balance can keep growing and help beat inflation.
- Risk: FD income is guaranteed; SWP from equity funds varies with the market. Many retirees use a hybrid or conservative fund for SWP.
Tips for a sustainable SWP
- Keep the yearly withdrawal rate below the fund's long-term return.
- Keep 1–2 years of expenses in a liquid fund, so you are not forced to sell after a market fall.
- Review the withdrawal amount every year for inflation.
Frequently asked questions
What is an SWP?
A Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount from a mutual fund every month or quarter. The rest of your money stays invested and keeps earning returns, which makes SWP a popular way to create a regular income in retirement.
How is SWP calculated?
Each month the remaining balance grows at the expected return, then the withdrawal is taken out. This calculator uses the monthly rate that compounds to your expected annual return, the same method used for SIPs.
How much can I withdraw safely?
A common guide is to keep yearly withdrawals below the expected return, so the corpus is not eaten into. For example, withdrawing 6–8% a year from an equity-oriented fund expected to earn 10–12% leaves room for bad years and inflation.
Is SWP income taxable?
Only the gain part of each withdrawal is taxed, as capital gains, not the whole amount. For equity funds held over a year, long-term gains up to ₹1.25 lakh a year are tax-free and the rest is taxed at 12.5%. This is often much lower than the tax on FD interest.
What happens if the money runs out?
If withdrawals are larger than what the fund earns, the balance falls every month and can reach zero. The calculator shows the month this happens, so you can lower the withdrawal or invest more.
Sources
- AMFI – Association of Mutual Funds in India (investor corner)
- SEBI – Securities and Exchange Board of India
Last updated 19 September 2026. Results are estimates for planning only and are not investment, tax or legal advice. See our disclaimer.