How it works
The reverse of a SIP
In a SIP you buy units every month. In an SWP the fund house sells units every month, enough to pay out the amount you asked for, and credits it to your bank on the chosen date.
Because the amount is fixed in rupees, the number of units sold changes with the NAV. When markets are up, fewer units go out. When they are down, more units are sold to pay the same amount. That second part is why the withdrawal amount matters so much.
You can stop, raise or lower an SWP with a simple request, and you can still take an extra lump sum out when a big expense comes up. There is no lock-in on the SWP itself, though an exit load may apply if units are sold within the fund's exit-load period, often the first 12 months in equity funds.
One month, worked out
- Corpus invested
- ₹50,00,000
- NAV when you invested
- ₹100
- Units you hold
- 50,000
- SWP amount
- ₹25,000
- NAV on SWP date
- ₹102
- Units sold
- 245.10
- Units left
- 49,754.90
Made-up NAV figures to show the mechanics. Of the ₹25,000 paid out, only ₹490 is gain; the rest is your own money coming back.
Sustainable withdrawal rate
How long ₹50 lakh lasts at different payouts
Each row starts at a share of the corpus a year, paid monthly, and raises the payout 6% every year to keep pace with prices. The corpus earns an assumed rate for illustration of 8% or 7% a year.
| Starting rate a year | First monthly payout | Lasts at 8% assumed | Lasts at 7% assumed | Our read |
|---|---|---|---|---|
| 3% | ₹12,500 | 60+ years | about 44 years | Very comfortable, leaves money for the next generation |
| 4% | ₹16,667 | about 38 years | about 31 years | Holds for a retirement that starts at 60 |
| 5% | ₹20,833 | about 27 years | about 24 years | Workable if there is a pension or rent on the side |
| 6% | ₹25,000 | about 21 years | about 19 years | Tight for anyone retiring before 65 |
| 7% | ₹29,167 | about 18 years | about 16 years | Runs out in the late 70s for most people |
| 8% | ₹33,333 | about 15 years | about 14 years | Eats the corpus, avoid unless the money has a short job |
Returns of 8% and 7% are assumed rates for illustration, not a promise, and real returns come in uneven years, some negative. A bad first few years hurts an SWP more than the averages show. Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Example table
₹25,000 a month, raised 6% every year
Same ₹50 lakh corpus, a 6% starting rate and an assumed rate for illustration of 8%. For the first ten years the balance barely moves, which makes the plan feel safe. The fall comes later, when the payout has grown to well over ₹50,000.
This is why we look at the plan again every year instead of setting it once. A small cut in year 6 or 7 can add many years at the far end.
Try your own numbers in the SWP calculator| Year | Monthly payout that year | Total taken so far | Balance at year end |
|---|---|---|---|
| 1 | ₹25,000 | ₹3,00,000 | ₹51,03,749 |
| 5 | ₹31,562 | ₹16,91,128 | ₹53,97,381 |
| 10 | ₹42,237 | ₹39,54,238 | ₹52,95,430 |
| 15 | ₹56,523 | ₹69,82,791 | ₹42,14,826 |
| 20 | ₹75,640 | ₹1,10,35,677 | ₹13,62,068 |
| 21 to 22 | Corpus runs out about 5 months into year 22 | ||
8% is an assumed rate for illustration, applied evenly each month. Real NAVs move up and down.
Where the SWP runs from
Three buckets, not one fund
Running an SWP straight out of a pure equity fund means selling shares after a crash. We split the corpus by when the money is needed.
- Next 1 to 2 years of payoutsA liquid or short-term debt fund. The SWP runs from here, so a market fall does not touch this month's income.
- Years 3 to 7Debt or conservative hybrid funds. Refills bucket one once or twice a year.
- Year 8 onwardsEquity or index funds, left alone to grow and beat inflation. Moved down slowly, mostly in good years, often through an STP.
Tax on an SWP
Why it often beats FD interest after tax
FD interest is taxed in full at your slab rate every year. In an SWP each payout is part capital, part gain, and only the gain is taxed. In the early years most of every payout is your own money coming back.
Rules as of 2026, check current rules before you act. Your own tax position can change the answer.
- Equity funds held over 12 months: gains taxed at 12.5%, and the first ₹1.25 lakh of such gains in a financial year is exempt.
- Equity funds held 12 months or less: gains taxed at 20%. One more reason to start an SWP from units held over a year.
- Debt funds bought on or after 1 April 2023: gains taxed at your slab rate, whatever the holding period.
- Units are sold first in, first out: the oldest units go first, which usually means the lower-tax ones.
Setting it up
What we do with you
About a week from the first call to the first credit in your bank account.
List the monthly need
Household spend, medicines, insurance premiums, help at home. Minus any pension, rent or interest you already get.
Check the rate
Divide the yearly gap by the corpus. Above 5% we talk about trimming the payout, working a little longer or using other assets.
Split into buckets
Move one to two years of payouts into the low-risk bucket, keep the long-term part in equity.
Register the SWP
Amount, date and bank account, set up with the fund house. KYC must be complete; see our KYC guide.
Review every year
Refill bucket one, raise the payout for inflation if the corpus allows, or hold it flat after a bad year.
Common mistakes
Where SWPs go wrong
Taking the "return" as income
If a fund showed 12% last year, people set a 12% SWP. One flat year later the corpus starts shrinking fast.
Never raising the payout
₹25,000 today buys roughly what ₹14,000 buys in ten years at 6% inflation. A flat SWP slowly becomes too small.
Starting in the exit-load window
Selling units within the exit-load period costs extra. Fresh money should sit in the right bucket first.
Choosing the dividend option instead
Payouts under the IDCW option are decided by the fund, not you, and are taxed in full at your slab rate.
Plan my SWP
Tell us the corpus and the monthly need
We work out a withdrawal rate the corpus can carry, split it into buckets and send the plan to you on WhatsApp. No charge for the first plan.
What is the minimum amount for an SWP?
Most fund houses allow an SWP from ₹500 or ₹1,000 a month, as long as the fund holds enough units. In practice an SWP is worth setting up once the corpus is a few lakh.
Is SWP income fixed like FD interest?
The payout amount is fixed by you, but the corpus behind it is not. If markets fall, the same payout sells more units and the balance drops faster. That is why we keep one to two years of payouts in a low-risk fund.
Can I change or stop the SWP later?
Yes. You can raise, cut, pause or cancel it with a request to the fund house, usually effective from the next cycle. You can also take an extra lump sum out anytime outside the SWP.
Monthly, quarterly or yearly payouts?
Monthly suits most households because it matches the bills. Quarterly means fewer transactions and fewer small tax lots to track. The corpus maths barely changes either way.
Is TDS deducted on SWP payouts?
For resident investors there is generally no TDS on capital gains from mutual fund redemptions; you pay the tax when you file your return. Different rules apply to NRIs, see NRI investing. Rules as of 2026, check current rules.
SWP or a senior citizen deposit scheme?
Often both. A fixed-income scheme gives a steady floor, and an SWP from a mixed portfolio covers the rest and grows over time. We look at the split based on your age and other income.
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