What is SWP (Systematic Withdrawal Plan) and How Does It Work?
An SWP turns a lump sum into a regular income stream without withdrawing it all at once — but the withdrawal rate decides whether the corpus lasts.
What is SWP?
A Systematic Withdrawal Plan (SWP) is a fixed, regular withdrawal taken from an existing investment, such as a mutual fund corpus, while the remaining balance stays invested and continues to earn returns. It is the mirror image of building up a corpus: instead of contributing money in, SWP draws it back out on a schedule.
When SWP helps
- Retirees who want a regular income without withdrawing the entire corpus at once.
- Anyone who wants predictable periodic cash flow while the remaining balance stays invested.
- An alternative to letting a large lump sum sit idle, or withdrawing it all upfront.
A worked example
Consider a ₹20,00,000 corpus with a ₹15,000 monthly withdrawal, assuming an 8% annual return, over 10 years.
| Metric | Value |
|---|---|
| Initial investment | ₹20,00,000.00 |
| Monthly withdrawal | ₹15,000.00 |
| Assumed annual return | 8% |
| Total withdrawn over 10 years | ₹18,00,000.00 |
| Remaining balance after 10 years | ₹16,76,795.34 |
Try your own corpus, withdrawal amount, and return assumption in the SWP Calculator.
Choosing a withdrawal rate
In this example, the ₹15,000 monthly withdrawal is well below what an 8% annual return generates on a ₹20,00,000 corpus, so the balance keeps growing even as withdrawals continue. The SWP Calculator also supports an "until balance is exhausted" mode, which shows how long a corpus lasts when the withdrawal rate is set higher than the assumed return can sustain.
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Frequently asked questions
Is SWP the opposite of SIP?
In a sense — SIP builds a corpus through regular contributions, while SWP draws down an existing corpus through regular withdrawals.
Can the corpus run out?
Yes, if withdrawals consistently exceed returns, the balance can deplete before the intended period ends.
Is SWP taxed differently from a lump-sum withdrawal?
Tax treatment depends on the underlying investment and applicable capital gains rules — consult a tax advisor for your specific situation.