SWP Explained – Withdraw Smartly from Your Investments
20 February 2025
A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investment at regular intervals. It’s often used to create a steady income stream, especially during retirement.
How SWP Works
You invest a lump sum amount and set up monthly/quarterly withdrawals. The mutual fund house redeems units equivalent to the withdrawal amount on your chosen date.
Tax Efficiency
SWP is tax-efficient because only the capital gains portion of each withdrawal is taxed, not the entire amount.
Use Cases
- Regular income after retirement.
- Funding monthly expenses from a large corpus.