An SWP (Systematic Withdrawal Plan) lets you withdraw a fixed amount from your mutual fund every month while the remaining corpus stays invested and earns returns. It’s the mirror image of a SIP — instead of putting money in regularly, you take money out regularly.
The calculator below shows you the remaining corpus after your chosen withdrawal period, the total amount withdrawn, and whether your corpus survives the full duration.
How SWP is calculated
The formula for remaining corpus after n months of SWP:
Remaining = C × (1 + r)ⁿ − W × [(1 + r)ⁿ − 1] / r
Where:
- C = starting corpus (₹)
- W = monthly withdrawal amount (₹)
- r = monthly return rate (annual rate ÷ 12 ÷ 100)
- n = number of months (years × 12)
If the result is positive, your corpus survives the period. If it turns negative, the fund depletes before the period ends — the calculator shows exactly which month that happens.
Worked example: ₹20 lakh corpus, ₹15,000/month withdrawal
A retired person has ₹20 lakh in a balanced advantage fund earning 8% p.a. and wants to withdraw ₹15,000/month.
| Input | Value |
|---|---|
| Starting corpus | ₹20,00,000 |
| Monthly withdrawal | ₹15,000 |
| Expected return | 8% p.a. |
| Period | 15 years (180 months) |
Monthly rate = 8 / 12 / 100 = 0.00667
Remaining = 20,00,000 × (1.00667)^180 − 15,000 × [(1.00667)^180 − 1] / 0.00667
| Output | Value |
|---|---|
| Remaining corpus | ₹11,89,474 |
| Total withdrawn | ₹27,00,000 |
| Returns earned | ₹18,89,474 |
| Corpus lasts | Full 15 years |
At 8% return, ₹15,000/month from a ₹20L corpus is sustainable for 15 years with ₹11.9L still left — because the remaining corpus keeps compounding while you draw down.
Safe withdrawal rate for Indian mutual funds
The “safe withdrawal rate” is the maximum percentage you can withdraw annually without depleting the corpus. For Indian investors:
| Fund type | Typical return | Safe annual withdrawal |
|---|---|---|
| Equity (Nifty 50 index) | 12% p.a. | 6–7% of corpus |
| Balanced advantage fund | 9–10% p.a. | 5–6% of corpus |
| Debt fund / short duration | 6–7% p.a. | 4–5% of corpus |
| FD / liquid fund | 6–7% p.a. | 4% of corpus |
Example: ₹1 crore corpus in an equity fund at 12% — safe to withdraw up to ₹7 lakh/year = ₹58,333/month without touching principal over 20+ years.
SWP vs FD interest payout
Many retirees compare SWP from a mutual fund with the monthly/quarterly interest from an FD. Key differences:
| Factor | SWP (mutual fund) | FD interest payout |
|---|---|---|
| Return | 8–12% (market-linked) | 6.5–7.5% (fixed) |
| Tax on withdrawal | LTCG 12.5% (after 1 year, above ₹1.25L) | Slab rate (20–30%) |
| Principal | Slowly drawn down | Protected fully |
| Flexibility | Can stop/change anytime | Locked in |
| Inflation protection | Yes (equity component) | No |
For most retirees in the 20–30% tax bracket, SWP from a hybrid or equity fund is more tax-efficient than FD interest. FD interest is taxed at your full slab rate every year; SWP redemptions are taxed as capital gains (12.5% LTCG after 1 year), which is significantly lower.
SWP for regular income — practical setup
Who uses SWP:
- Retirees who have a lump sum from EPF/gratuity payout and need monthly income
- Anyone who has received a large bonus, inheritance, or property sale proceeds
- NRIs parking money in Indian funds who need rupee income periodically
Which fund to use:
- Balanced advantage funds (BAFs) — most popular for SWP because they auto-rebalance between equity and debt; returns smooth out compared to pure equity
- Conservative hybrid funds — for lower risk appetite
- Pure equity (index fund) — for long horizon (15+ years), higher withdrawal sustainability
How to set up SWP:
- Log into your mutual fund folio (Groww, Kuvera, ET Money, or AMC website directly)
- Select the fund and choose “Start SWP”
- Enter monthly amount, date (1st or 15th), and duration (fixed period or perpetual)
- Units get redeemed automatically each month and credited to your bank
Tax tip: SWP redemptions are treated as unit redemptions — FIFO (first in, first out). Units held more than 12 months in equity funds attract 12.5% LTCG. Keep redemptions under ₹1.25 lakh/year in gains to use the annual LTCG exemption.
Frequently asked questions
What happens if the market falls during my SWP period?
If returns drop below your withdrawal rate for an extended period, your corpus depletes faster. This is called “sequence of returns risk.” To protect against this: keep 2–3 years of withdrawals in a liquid/short-term debt fund and withdraw from that buffer while equity recovers. Most financial planners call this a “bucket strategy.”
Can I pause or modify my SWP?
Yes. Unlike FD premature withdrawal penalties, SWP can be stopped, paused, or changed anytime at no cost (exit loads may apply on redemptions within 1 year for some equity funds — check your fund’s exit load schedule before starting).
Is there a minimum amount for SWP?
Most AMCs set a minimum of ₹500–₹1,000 per withdrawal. Practically, amounts below ₹5,000/month rarely make sense due to exit load and tax tracking overhead.
Does SWP affect my remaining units?
Yes — each withdrawal redeems units at that day’s NAV. If you withdraw ₹10,000 and NAV is ₹50, your folio loses 200 units. The remaining units continue to appreciate or depreciate with the market.
SWP vs dividend option — which is better?
SWP is almost always better than the dividend option for income. Dividends from mutual funds are taxed at your full slab rate (as “other income”), while SWP LTCG is taxed at 12.5% after 1 year. Additionally, dividends reduce the NAV by the payout amount — there’s no free lunch. The SEBI renamed “dividend” to “IDCW” (Income Distribution cum Capital Withdrawal) precisely to clarify that dividends come out of your own corpus.
Sources
- SEBI: Mutual Fund Regulations — SWP operational guidelines
- AMFI: Investor education materials on SWP
- Income Tax Act 1961: Section 112A (LTCG on equity mutual funds)
- SEBI circular on renaming dividend option to IDCW (May 2021)