SWP (Systematic Withdrawal Plan) — Mutual Fund Term Explained

Withdrawing a fixed amount from a mutual fund at regular intervals. Used to create regular income from a corpus — like a self-made pension.

A Systematic Withdrawal Plan (SWP) is the reverse of a SIP. You withdraw fixed amounts at regular intervals from your existing investment. The remaining corpus stays invested and continues to earn returns.

SWPs are tax-efficient because only the gain portion of each withdrawal is taxed, not the principal.

Related terms

• SIP (Systematic Investment Plan) — Investing a fixed amount in a mutual fund at regular intervals — typically monthly. Builds discipline and uses rupee cost averaging to reduce timing risk.
• STP (Systematic Transfer Plan) — Automatically transfer a fixed amount from one fund (liquid/debt) to another (equity) at regular intervals. Used to deploy a lump sum gradually.
• Growth Option — The default option where all returns are reinvested — no payouts. NAV compounds over time. Tax-efficient for long-term investors.
• IDCW (Income Distribution cum Capital Withdrawal) — Previously called the dividend option. The fund distributes money from its NAV. Not a bonus — your NAV falls by the distribution amount.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.