SWP: How to Create a Monthly Income from Your Mutual Fund Corpus
A Systematic Withdrawal Plan (SWP) from your mutual fund corpus can generate better monthly income than FD interest — with lower tax and inflation protection.
Systematic Withdrawal Plan — The Retiree's Best Friend
You've spent decades building your corpus through SIPs. Now what? A Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount every month from your mutual fund corpus — creating a predictable income stream, just like a pension.
How SWP Works
You invest a lumpsum (say ₹50 Lakhs) in a balanced or debt fund. You then instruct the fund house to redeem ₹30,000 every month. The remaining corpus continues to grow.
SWP vs FD Interest: Why SWP Wins
| Parameter | FD Interest | SWP |
|---|---|---|
| Monthly Income (₹50L) | ₹27,500 (6.6% p.a.) | ₹35,000+ (estimated) |
| Tax | Fully taxable as income | Only gain portion taxed (LTCG) |
| Capital Protection | Full | Corpus grows over time |
| Inflation Adjusted | No | Yes (returns beat inflation) |
Ideal SWP Setup
- Corpus: ₹50 Lakhs or more
- Fund: Balanced Advantage Fund or Short Duration Debt Fund
- Withdrawal: 6-7% of corpus annually (sustainable)
- Review: Annual rebalancing recommended
Real Example
₹60 Lakhs in a Balanced Advantage Fund at 10% annual return. SWP of ₹40,000/month. After 10 years, your corpus still stands at ₹58 Lakhs — essentially withdrawing from returns, not principal. Talk to Finadore to design your SWP strategy.
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