What is SWP (Systematic Withdrawal Plan)?

A Systematic Withdrawal Plan (SWP) is the mirror image of a SIP: instead of investing a fixed amount regularly, you withdraw a fixed amount from your fund at set intervals (usually monthly). The rest stays invested and keeps growing.

Why people use an SWP

• Retirement income — a steady monthly "salary" from your corpus.
• Tax efficiency — unlike an FD where all interest is taxed, in an SWP only the small gain portion of each withdrawal is taxed, and equity LTCG up to ₹1.25 L/year is exempt.
• You stay invested — the untouched corpus continues to compound.

The risk to watch: sequence of returns

If markets fall early while you're withdrawing, you sell more units at low prices and your corpus can deplete faster. A sustainable withdrawal rate (often ~4–6% of the corpus a year) plus a cushion of debt/hybrid funds reduces this risk.

→ Check how long your corpus lasts with the SWP calculator.