A Systematic Withdrawal Plan (SWP) is a facility offered by Indian mutual funds that allows investors to withdraw a fixed amount at regular intervals (monthly, quarterly, or annually) from their mutual fund investments. It's the opposite of SIP - instead of investing regularly, you withdraw regularly while your remaining corpus continues to earn returns. SWP is ideal for retirees or those needing regular income from their investments.

SWP returns are calculated using the formula: Remaining Value = Initial Investment × (1 + r)^n - Monthly Withdrawal × [((1 + r)^n - 1) / r], where r is the monthly return rate and n is the number of months. Our SWP calculator projects how your corpus will decline over time while accounting for continued growth on the remaining amount. It shows the remaining value, total withdrawn, and net gain/loss over the withdrawal period.

Financial advisors typically recommend a withdrawal rate of 4-6% annually from your corpus to preserve capital over the long term. For example, from a ₹25 lakh corpus earning 10% annually, withdrawing ₹8,000-12,000 monthly (4-6% annually) can help maintain the corpus while providing regular income. Higher withdrawal rates may deplete your corpus faster, especially during market downturns.

SWP can be better than fixed deposits for regular income as it offers potential for higher returns (8-12% vs 6-7% in FDs) and better tax efficiency. In SWP, only the withdrawn amount is subject to capital gains tax, while FD interest is fully taxable. Additionally, your remaining corpus continues to grow in SWP, whereas FD principal remains static. However, SWP carries market risk unlike the guaranteed returns of FDs.

SWP taxation is more tax-efficient than dividend income. In SWP, you pay capital gains tax only on the profit portion of withdrawals - 10% LTCG (after ₹1 lakh exemption) for equity funds held over 12 months, and 20% with indexation for debt funds held over 36 months. Dividends are taxed at your income tax slab rate. SWP also allows you to control the timing and amount of tax liability.

Yes, most mutual funds allow you to start SWP immediately after making a lumpsum investment, though some funds may have a minimum holding period (typically 15-30 days). However, for better tax efficiency in equity funds, it's advisable to wait for 12 months to qualify for Long Term Capital Gains tax rates (10%) instead of Short Term Capital Gains (15%).

If your SWP withdrawal amount exceeds the available fund balance, the mutual fund will either withdraw the entire remaining amount and close your investment, or auto-redeem as many units as available and inform you about the shortfall. Some funds automatically terminate SWP when the balance becomes insufficient. It's important to plan your withdrawal rate to ensure sustainable income.

For SWP, balanced/hybrid funds and conservative equity funds are generally preferred as they provide moderate growth with lower volatility compared to pure equity funds. Large-cap funds, dividend yield funds, and monthly income plans are popular choices. The key is choosing funds with consistent performance and lower volatility to ensure your corpus lasts longer and provides stable withdrawals.

To calculate sustainable SWP amount: (1) Determine your required monthly income, (2) Calculate your total corpus, (3) Use the 4% rule - withdraw 4% annually (corpus ÷ 25 = sustainable monthly withdrawal), (4) Factor in inflation by choosing growth-oriented funds. For example, ₹50 lakh corpus can sustainably provide ₹16,000-20,000 monthly income assuming 8-10% fund returns.

Yes, SWP is flexible - you can modify the withdrawal amount, change the frequency, skip withdrawals, or stop SWP completely at any time by submitting instructions to the fund house. Most fund houses allow online modifications through their websites or mobile apps. Some funds may require advance notice (typically 7-15 days) for changes to take effect in the next withdrawal cycle.