How SWP works
You invest a lump sum in a mutual fund and withdraw a fixed amount every month. The remaining balance continues to earn returns.
Balance after each month = (Previous balance − Withdrawal) × (1 + monthly return)
If your withdrawal is less than the monthly return, your corpus actually grows. If it's more, it depletes over time.
SWP vs FD for retirement income
| Factor | SWP | FD |
|---|---|---|
| Returns | 8-12% (equity), 6-8% (debt) | 6-7.5% fixed |
| Tax efficiency | Only gains taxed per withdrawal | Full interest taxable yearly |
| Capital preservation | Corpus can grow if returns > withdrawal | Fixed, depletes on withdrawal |
| Risk | Market-linked (varies) | Zero risk (guaranteed) |
FAQ
What withdrawal amount is sustainable?
The 4% rule suggests withdrawing 4% of your corpus annually (0.33% monthly) is sustainable for 25-30 years. For ₹50 lakh, that's ~₹16,700/month. Higher withdrawals deplete faster.
Can I change my SWP amount?
Yes. Most mutual fund platforms let you modify or stop SWP at any time with no penalty. You can increase, decrease, or pause withdrawals as needed.