SWP Explained: Turn Your Mutual Funds Into a Monthly Income

A SWP (Systematic Withdrawal Plan) is the reverse of a SIP: instead of adding money monthly, you withdraw a fixed amount while the remaining corpus stays invested and keeps growing.

Why retirees love it - Predictable income — a fixed monthly payout, like a pension. - Tax efficiency — each withdrawal is partly capital, so only the gains portion is taxed (often less than an FD's fully-taxed interest). - Growth continues — the un-withdrawn balance stays invested.

The key rule: don't over-withdraw If your fund grows ~10%/year and you withdraw ~6%/year, the corpus can last decades and even grow. Withdraw too much, and you erode the principal. A common safe range is 4–6% a year.

How to set it up 1. Build a corpus (often via SIPs during your working years). 2. Park it in a relatively stable fund (balanced-advantage or conservative hybrid for retirees). 3. Start an SWP for your monthly need.

Pair this with your retirement plan. Market risk still applies — sequence-of-returns risk means a crash early in retirement hurts most.