A Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount from a mutual fund every month, while the rest of the money stays invested. It is popular with retirees and anyone who wants a regular income from a lump sum. The key question is simple: will the money last, and how much will be left?
How to use the SWP calculator
- Enter the total investment (the lump sum you start with).
- Enter the monthly withdrawal you need.
- Enter the expected yearly return on the remaining money.
- Choose the time period.
You get the total amount withdrawn, the value left at the end, and how long the money lasts. The year-wise breakdown shows the balance at the end of every year.
How SWP is calculated
Every month, the remaining balance earns one month of return, and then your withdrawal is taken out:
Balance next month = Balance × (1 + r ÷ 12 ÷ 100) − WithdrawalIf the withdrawal is more than the growth, the balance slowly falls. If it is less, the balance keeps growing even while you withdraw.
Example
You invest ₹10,00,000, withdraw ₹10,000 a month for 10 years, and assume an 8% yearly return.
- Total withdrawn = ₹12,00,000
- Value left after 10 years = ₹3,90,180
You take out more than you put in, and still have money left, because the balance keeps earning while you withdraw.
How much can you withdraw?
₹10,00,000 invested at an assumed 8% return, over 20 years:
| Monthly withdrawal | What happens | Left after 20 years |
|---|---|---|
| ₹5,000 | Lasts the full period | ₹19,81,701 |
| ₹6,667 | Lasts, capital stays about the same | ₹9,99,804 |
| ₹8,000 | Lasts, capital mostly used up | ₹2,14,639 |
| ₹10,000 | Runs out after 13 years 10 months | ₹0 |
| ₹12,000 | Runs out after 10 years 3 months | ₹0 |
A useful rule: withdrawing only about the monthly return (here ₹6,667 on ₹10 lakh at 8%) keeps your capital roughly intact. But inflation means you will probably want to increase withdrawals over time, so leave a margin.
Things to keep in mind
- Returns vary. Equity and hybrid funds can fall in some years. A fall in the early years of withdrawals hurts the most, so many retirees use more stable debt or hybrid funds for SWP.
- Tax is only on the gains. Each withdrawal is part your own capital and part gains. Only the gains portion is taxed, which often makes SWP more tax-efficient than FD interest.
- Exit loads may apply if you withdraw within the fund's exit-load period.
FAQ
What is SWP in mutual funds?
It is a facility to withdraw a fixed amount from your mutual fund investment at regular intervals, usually monthly, by redeeming units. The remaining units stay invested.
How long will my money last with SWP?
It depends on the withdrawal amount, the return and the time. Enter your numbers and the calculator shows whether the money lasts the full period or when it runs out.
What is a safe SWP withdrawal rate?
Withdrawing less than the expected return keeps your capital intact. For retirement, many planners suggest starting with a yearly withdrawal of about 4–5% of the corpus, adjusted for your situation.
SWP or FD interest for monthly income?
FD interest is fixed but fully taxable at your slab rate. SWP returns vary but only the gains are taxed. Compare with the FD calculator, and plan your full retirement with the retirement calculator.