Financial calculators by Dailytrades
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SWP Calculator
Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount of money from your mutual fund investments regularly.
SWP Explained: Turning Mutual Funds into Monthly Salary
A Systematic Withdrawal Plan (SWP) allows you to redeem a fixed rupee amount from your mutual fund portfolio at regular intervals (monthly, quarterly, or annually). While you receive a steady monthly cash payout, your remaining corpus stays invested to earn compound returns.
For post-retirement income, SWP from Equity Hybrid or Balanced Advantage Funds is significantly more tax-efficient than Bank FD monthly interest, because tax is paid only on the profit portion of redeemed units, not the whole payout.
SWP vs Bank FD Monthly Payout: Comparison
| Feature | SWP (Mutual Funds) | Bank FD Monthly Payout |
|---|---|---|
| Taxation | Taxed only on capital gain portion | 100% interest taxed at slab rate (up to 30%+) |
| Capital Protection & Growth | Remaining capital grows with market returns | Fixed principal erodes under inflation |
| Payout Flexibility | Modify, pause, or increase payout anytime | Fixed payout locked till maturity |
| Liquidity | Redeem remaining balance instantly | Penalty on premature closure |
Safe Withdrawal Rate (SWR) Concept
To ensure your retirement savings last indefinitely, financial planners recommend adhering to a Safe Withdrawal Rate (SWR) of 6% to 7% annually when your fund portfolio yields 10%–12% average returns.
When your annual withdrawal rate is less than your portfolio's annual growth rate, your remaining wealth actually continues to grow even after paying you a monthly income stream!