| Aspect | SIP | SWP |
|---|---|---|
| Purpose | Regular Investment | Regular Withdrawal |
| Cash Flow | Money Goes Out | Money Comes In |
| Investment Growth | Increases Over Time | Decreases Over Time |
| Best For | Wealth Creation | Income Generation |
SWP or Systematic Withdrawal Plan is the opposite of SIP. While SIP is investing a fixed amount regularly to build wealth, SWP is withdrawing a fixed amount regularly from your mutual fund investments to generate monthly income. This is popular among retirees, senior citizens, and anyone who wants regular income from their accumulated corpus without having to sell all investments at once.
For FY 2025-26, SWP works best with equity or hybrid mutual funds where you have a large corpus. You can set up monthly withdrawals (like ₹20,000 or ₹50,000 per month) and the fund house automatically sells a portion of your units to give you that money. The remaining corpus continues to grow, balancing withdrawals with potential capital appreciation. This is better than keeping all money in FD because while FD gives fixed interest, SWP in equity funds can potentially give higher returns though with some market risk.
SWP taxation depends on how long you've held the mutual fund units being redeemed. If held less than 12 months (equity) or 36 months (debt), gains are treated as short-term and taxed accordingly. However, most long-term investors use SWP from funds held for years, so withdrawals are usually long-term capital gains with beneficial tax rates. Our SWP calculator helps you understand how much corpus you need to generate your desired monthly income, and how long your corpus will last at different withdrawal rates.
SWP is especially useful if you've built a large corpus through long-term investments like SIPs or PPF and now want to convert that into regular income during retirement. It's part of comprehensive retirement planning where you need both lump sum corpus and regular income stream. Unlike annuities which lock you into fixed payments forever, SWP gives flexibility to change withdrawal amount or stop temporarily if needed.
SIP (Systematic Investment Plan) involves regular investments to build wealth, while SWP (Systematic Withdrawal Plan) involves regular withdrawals to generate income from existing investments.
This calculator provides estimates based on assumed returns and does not guarantee actual performance. Mutual fund investments are subject to market risks and actual returns may vary.
SWP returns depend on the initial investment amount, withdrawal frequency and amount, expected return rate, investment duration, and market performance of the underlying mutual funds.
Yes, SWP is an excellent tool for retirement planning as it provides regular income while keeping your investment growing. It helps in systematic wealth distribution during retirement years.
SWP withdrawals may be subject to capital gains tax depending on the holding period and type of mutual fund. Long-term capital gains (over 1 year) are taxed at 10% for equity funds and 20% for debt funds.
Yes, most mutual funds allow you to modify your SWP amount, frequency, or even pause/resume withdrawals. However, terms and conditions may vary between fund houses.