What is SWP?
Systematic Withdrawal Plan
An SWP lets you withdraw a fixed amount from your mutual fund investment at regular intervals, while the remaining corpus stays invested and continues to grow (or shrink) with the market. It is essentially the reverse of a SIP.
SWPs are commonly used by retirees who want a predictable monthly income from a lump sum corpus without cashing out the entire investment at once — the untouched portion keeps earning returns and each withdrawal is taxed only on the gains portion, which can be more tax-efficient than an FD's fully taxable interest.
If your withdrawal rate exceeds the fund's actual returns, the corpus will eventually be depleted faster than expected — always check the sustainable withdrawal rate before committing to a fixed monthly amount.
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