{"id":13537,"date":"2025-05-16T16:21:40","date_gmt":"2025-05-16T10:51:40","guid":{"rendered":"https:\/\/gwcindia.in\/blog\/?p=13537"},"modified":"2025-05-16T16:21:40","modified_gmt":"2025-05-16T10:51:40","slug":"systematic-withdrawal-plan-swp-the-opposite-of-sip-explained","status":"publish","type":"post","link":"https:\/\/www.gwcindia.in\/blog\/systematic-withdrawal-plan-swp-the-opposite-of-sip-explained\/","title":{"rendered":"Systematic Withdrawal Plan (SWP): The Opposite of SIP Explained"},"content":{"rendered":"

Systematic Withdrawal Plan (SWP): The Opposite of SIP Explained<\/strong><\/h1>\n

You\u2019ve probably heard of SIPs\u2014Systematic Investment Plans\u2014where you invest a fixed amount regularly in mutual funds. But what if you need regular income from your investments<\/strong> instead?<\/p>\n

Enter the Systematic Withdrawal Plan (SWP)<\/strong>\u2014a powerful yet underused feature that offers consistent cash flows without redeeming your entire investment<\/strong>.<\/p>\n

Whether you’re retired, need a second income, or want tax-efficient withdrawals, SWP could be the solution. Let\u2019s break it down.<\/p>\n

\n

What Is a Systematic Withdrawal Plan (SWP)?<\/strong><\/h3>\n

An SWP allows you to withdraw a fixed amount of money<\/strong> from your mutual fund investment at regular intervals\u2014monthly, quarterly, or annually.<\/p>\n

\u2705 You stay invested in the fund
\n\u2705 Your money keeps growing
\n\u2705 You withdraw only a part, not the whole<\/p>\n

It\u2019s like getting a salary from your own investment.<\/strong><\/p>\n

\n

SWP vs SIP: A Mirror Image<\/strong><\/h3>\n

\"\"<\/p>\n

\n

How SWP Works<\/strong><\/h3>\n

Let\u2019s say you invest \u20b910 lakh in a debt mutual fund<\/strong> and set up an SWP of \u20b910,000 per month<\/strong>.<\/p>\n

    \n
  • Each month, \u20b910,000 is credited to your bank account<\/li>\n
  • The remaining amount stays invested and continues to earn returns<\/li>\n
  • You can stop, modify, or pause the SWP anytime<\/li>\n<\/ul>\n
    \n

    Benefits of SWP<\/strong><\/h3>\n

    \u2705 Regular Cash Flow<\/strong><\/p>\n

    Get a stable, predictable monthly income\u2014ideal for retirees or freelancers.<\/p>\n

    \u2705 Capital Preservation + Growth<\/strong><\/p>\n

    Unlike FD interest payouts, your principal remains invested and can grow over time.<\/p>\n

    \u2705 Tax Efficiency<\/strong><\/p>\n

    SWP withdrawals are considered redemptions<\/strong>, not income:<\/p>\n

      \n
    • Only capital gains<\/strong> are taxed<\/li>\n
    • Lower tax rates<\/strong> than interest income<\/li>\n
    • Long-term gains (after 3 years in debt funds)<\/strong> taxed at 20% with indexation benefits<\/li>\n<\/ul>\n

       <\/p>\n

      \u2705 Flexibility<\/strong><\/p>\n

        \n
      • Set any withdrawal amount and frequency<\/li>\n
      • Can be started\/stopped at any time<\/li>\n
      • Choose the best fund as per your needs (equity, hybrid, or debt)<\/li>\n<\/ul>\n
        \n

        Real-Life Example: Mr. Sharma\u2019s Retirement Plan<\/strong><\/h3>\n

        Mr. Sharma, aged 60, retires with \u20b930 lakh invested in a low-risk debt mutual fund.
        \nHe sets up an SWP of \u20b920,000 per month<\/strong> to cover monthly expenses.<\/p>\n

        Over time:<\/p>\n

          \n
        • He continues to earn returns (6\u20137%) on his remaining investment<\/li>\n
        • Withdraws capital gradually<\/li>\n
        • Pays less tax compared to FD or annuity income<\/li>\n<\/ul>\n
          \n

          \u26a0\ufe0f Things to Keep in Mind<\/strong><\/h4>\n

          Choose Fund Wisely<\/strong>: For regular income, prefer debt or hybrid funds<\/strong> with low volatility
          \nAvoid Overdrawing<\/strong>: If withdrawals exceed returns, your capital will erode
          \nPlan for Inflation<\/strong>: Consider increasing your SWP amount annually
          \nTax Planning<\/strong>: Track short- vs long-term gains based on holding period<\/p>\n

          \n

          When Should You Use an SWP?<\/strong><\/h3>\n

          Use SWP If You:<\/strong><\/p>\n

            \n
          • Are retired and need monthly income<\/li>\n
          • Want tax-efficient withdrawals<\/li>\n
          • Have a lump sum to invest but want phased usage<\/li>\n
          • Are building a second income stream without stopping growth<\/li>\n<\/ul>\n
            \n

            SWP Is Not Ideal If:<\/strong><\/p>\n

              \n
            • You need guaranteed income (FDs or annuities are better)<\/li>\n
            • You\u2019re investing in highly volatile funds (e.g., small-cap equity)<\/li>\n
            • You haven\u2019t held the fund long enough (can trigger short-term capital gains tax)<\/li>\n<\/ul>\n
              \n

              Conclusion<\/strong><\/h3>\n

              SWP is the reverse of SIP\u2014designed to help you enjoy the fruits of your investment.<\/strong>
              \nIt\u2019s a smart way to generate regular income, manage taxes, and keep your wealth growing.<\/p>\n

              Whether you’re entering retirement or just want your money to work harder while giving you cash flow, SWP can be a simple yet powerful tool<\/strong> in your investment strategy.<\/p>\n

              \n

              Want to Set Up an SWP?<\/strong><\/h3>\n

              At Goodwill Wealth Management<\/strong>, we help you plan customized SWPs for retirement, monthly expenses, or passive income\u2014based on your fund type, tax position, and cash flow needs.<\/p>\n

              Talk to our experts<\/strong> today and create an income stream that works for you.<\/p>\n","protected":false},"excerpt":{"rendered":"

              Systematic Withdrawal Plan (SWP): The Opposite of SIP Explained You\u2019ve probably heard of SIPs\u2014Systematic Investment Plans\u2014where you invest a fixed amount regularly in mutual funds. But what if you need regular income from your investments instead? Enter the Systematic Withdrawal Plan (SWP)\u2014a powerful yet underused feature that offers consistent cash flows without redeeming your entire […]<\/p>\n","protected":false},"author":7,"featured_media":13541,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[1306,1314,1312,1315,1307,1317,1301,1310,1316,1304,1302,1305,1313,1300,1308,1309,1311,1299,1298,1303],"class_list":["post-13537","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-education","tag-best-mutual-funds-for-swp","tag-capital-gains-tax-in-swp","tag-generate-regular-income-from-investments","tag-goodwill-wealth-swp-planning","tag-how-swp-works-in-mutual-funds","tag-low-risk-income-strategy-india","tag-monthly-income-from-mutual-funds","tag-mutual-fund-income-strategy","tag-mutual-fund-investment-for-monthly-returns","tag-mutual-fund-withdrawal-strategy","tag-passive-income-with-mutual-funds","tag-retirement-planning-india","tag-swp-for-freelancers-and-seniors","tag-swp-for-retirees","tag-swp-in-debt-funds","tag-swp-taxation-in-india","tag-swp-vs-fixed-deposit","tag-swp-vs-sip","tag-systematic-withdrawal-plan-explained","tag-tax-benefits-of-swp"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/13537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/comments?post=13537"}],"version-history":[{"count":4,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/13537\/revisions"}],"predecessor-version":[{"id":13543,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/13537\/revisions\/13543"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/media\/13541"}],"wp:attachment":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/media?parent=13537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/categories?post=13537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/tags?post=13537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}