Editorial Team: One Touch Finance

How to get regular income from your mutual funds: Your complete SWP guide

Let me show you how to make your investments pay you every month

What’s an SWP and why should you care?

Think about this for a second. What if your investments could send you money every month, just like a salary? That’s exactly what an SWP does.

A Systematic Withdrawal Plan is basically the opposite of a SIP. Instead of putting money in regularly, you’re taking money out regularly. You decide how much you want and how often – maybe ₹10,000 every month, or ₹30,000 every quarter. Whatever works for you.

Here’s the cool part: your money keeps growing even while you’re taking these withdrawals. It’s like having your cake and eating it too.

How does this actually work?

Let me break it down for you:

You start with some money invested

First, you need to pick a mutual fund that fits what you’re trying to do. Then you put in a lump sum amount to get started.

You tell them how much you want.

Once your money’s in there, you tell the fund house to send you a fixed amount on whatever schedule you like. They’ll transfer it straight to your bank account.

They sell some units to pay you.

Every time you get paid, the fund house sells just enough units to give you your money. They use that day’s NAV (that’s just the price per unit) to figure out how many units to sell.

The money shows up in your account.

The money lands in your bank account automatically. This keeps happening until you tell them to stop or change it.

Everything else keeps working for you.

Whatever’s left in your fund keeps doing its thing in the market. While you’re using the withdrawals for your daily expenses, the rest is still trying to grow.

Why do people love SWPs?

You get regular money without selling everything.

This is huge. You get a steady cash flow without having to sell your whole investment. You can customize how much you want and when you want it.

The tax thing is pretty smart.

Here’s something most people don’t know: only the profit part of your withdrawals gets taxed, not the whole amount. That’s way better than most other income options out there.

Your money doesn’t just sit there.

While you’re taking money out, the rest of your investment is still working hard. It can still grow and make more money for you.

It’s perfect when you retire.

A lot of retired folks use this to add to their pension. You get a regular income without the stress of managing everything yourself.

You’re in control

You can change the amount anytime. You can stop it whenever you want. You can even add more money or take out extra when you need to. It’s totally flexible.

What about taxes?

Okay, taxes aren’t fun, but let’s keep this simple. What you pay depends on what kind of fund you’re withdrawing from.

If you’re withdrawing from equity funds

These are funds that put at least 65% of their money in stocks.

Here’s what changed in July 2024:

If you hold the units for less than 12 months, you pay 20% tax on any gains.

If you hold them for more than 12 months, you pay 12.5% tax – but only on gains above ₹1.25 lakh per year.

What this means for you: Hold your equity funds for over a year. The first ₹1.25 lakh of gains each year is completely tax-free. You only pay 12.5% on anything above that.

If you’re withdrawing from debt funds

These funds mostly invest in bonds and other fixed-income instruments.

If you held units for 36 months or less, you pay tax based on your income tax slab.

If you held them for more than 36 months, you pay 20% tax with indexation benefits.

Big change: For any debt funds you bought after April 1, 2023, everything gets taxed as per your income tax slab. The holding period doesn’t matter anymore.

How do you actually set this up?

It’s easier than you think:

Pick your fund and put money in

Choose a mutual fund that makes sense for what you’re trying to do. Put in a lump sum. Most funds let you start with just ₹500 or ₹1,000, so it’s not like you need to be rich.

Fill out the form

You’ll need to fill out an SWP form (some people call it a distribution form). This is where you pick if you want money monthly, quarterly, or yearly.

Decide how much you want.

Pick the amount you want to get each time. This money will show up in your bank account automatically on the dates you choose.

Send it in, and you’re done.

Just tell your mutual fund company or broker to set it up from whatever date you want. Pick your amount and how often you want it.

That’s it. They handle everything else after that.

Which funds work best for SWP?

Based on real performance numbers, here are some good options:

ICICI Prudential Balanced Advantage Fund

How it’s been doing:

Last 5 years: 15.35% returns
Last 3 years: 13.62% returns
Last 1 year: 6.94% returns

The details:

You can start with just ₹100
Total money in the fund: ₹65,711 Crore
They charge 0.86% as fees
Sharpe ratio: 0.98

What does this fund do? It tries to make money for you by using different strategies – equity derivatives, arbitrage opportunities, and direct stock investments.

This balanced approach works well if you don’t want to take crazy risks but still want decent returns.

Other solid choices

Here are some other funds people use for SWP:

SBI Bluechip Fund (focuses on big, stable companies)
HDFC Balanced Advantage Fund (changes allocation based on market conditions)
Kotak Standard Multicap Fund (invests across different-sized companies)
Mirae Asset Large Cap Fund (blue-chip companies)

Always check current numbers on sites like Value Research, Moneycontrol, or Groww before you invest. Fund performance changes all the time.

Watch out for these mistakes.

Don’t take out too much.

If you withdraw more than your fund is growing, you’ll eventually run out of money. Simple math.

Smart move: Most experts say don’t withdraw more than 4-5% of your starting investment per year. This way, your money can last 25-30 years or more.

Markets go up and down.

When markets drop, more of your units get sold to give you the same amount of money. This can eat up your investment faster than you’d like.

Some funds charge exit fees.

Many funds charge you 1% if you take money out in the first year. It’s called an exit load.

Pro tip: Wait at least a year after investing before you start your SWP. This way, you avoid these fees.

Inflation is sneaky

₹10,000 today won’t buy the same stuff in 10 years. You might want to increase your withdrawal amount every few years to keep up with rising prices.

How does SWP compare to other options?

SWP vs fixed deposits

Fixed deposits give you:

Guaranteed returns (usually 6-7%)
Your interest gets taxed at your full income tax rate
Safe, but doesn’t grow much

SWP from mutual funds gives you:

Chance for higher returns (but not guaranteed)
Better tax treatment (especially with equity funds)
Your money can keep growing even while you’re taking withdrawals

It really depends on what you’re trying to do. SIP is great for building wealth slowly by investing regularly. SWP is perfect for getting a regular income from money you’ve already invested.

SWP vs dividends

SWP beats dividends hands down. Here’s why: when you get dividends, the fund company takes out 10% as TDS right away. Plus, you pay tax on the whole dividend amount you get.

With SWP, you decide when and how much to withdraw. And the tax treatment is way better.

Who should use SWP?

If you’re retired

SWP is perfect for retirees or anyone who needs extra income. You get regular cash to cover your bills while your main investment stays put and keeps working.

If you have specific needs coming up

Maybe you need to pay for your kid’s college. Or you have an EMI to cover. Or you’re planning for retirement. SWP works for any regular expense you can think of.

If you just want a regular income

Any time you want regular cash flow from your investments, SWP is a smart choice.

Important stuff to remember

You can stop or change it anytime.

Yep, you can cancel your SWP whenever you want. Just tell your mutual fund company or distributor. This flexibility means you can adjust things as your life changes.

Use the calculators

Lots of mutual fund companies have SWP calculators on their websites. These tools show you how long your money will last based on different withdrawal amounts and expected returns.

Play around with them before you commit to anything.

Keep emergency money separate.

Don’t put every rupee you have into SWP. Keep at least 6-12 months of expenses in a separate emergency fund that you can access immediately.

Check on it regularly.

Markets change. Your needs change. Look at how your SWP is doing at least once a year. Make adjustments if you need to.

Your common questions answered.

How much do I need to start?

Not as much as you’d think. Most funds let you start with ₹500-₹1,000 for the lump sum investment.

For the withdrawal amount, you can usually go as low as ₹500 or ₹1,000 per month.

Can I do SWP on my SIP investment?

Absolutely! You can set up SWP on any mutual fund money, whether you put it in as a lump sum or through SIP. Just make sure you’ve finished any lock-in period first.

What happens if my fund loses value?

Your SWP keeps going, but they’ll have to sell more units to give you your fixed amount. This is why picking a stable, good fund really matters.

Can I have more than one SWP?

Sure can. You can set up SWPs in different funds, or even have multiple SWPs with different amounts in the same fund.

Is SWP better than just selling everything?

Usually, yes. Instead of selling your whole investment at once, SWP lets you take money out slowly. Most of your investment stays in the market and keeps growing.

How to pick the right fund for your SWP

Look for steady performance

Don’t just go for the fund with the highest returns. Look for funds that consistently do well over 5+ years. Steady wins the race here.

Check how much it bounces around.

Lower volatility means the fund doesn’t swing up and down as much. For SWP, you want something stable. These funds don’t fall as hard when markets crash because they have some debt mixed in.

See how big the fund is

ICICI Prudential Balanced Advantage Fund has ₹65,711 Crore in assets. Bigger funds are usually more stable, though super huge funds might move more slowly.

Look at the fees

ICICI Prudential Balanced Advantage Fund charges 0.86%. Lower fees mean more money stays invested for you.

Try to find equity funds under 1% and debt funds under 0.5%.

Check who’s running it.

Look for fund managers who’ve been through different market situations. Experience really counts here.

My advice for making SWP work

Start with a rate you can sustain

Take 4-5% of your starting investment as your yearly withdrawal. Divide by 12 to get your monthly amount. This historically makes your money last 25-30 years.

Here’s an example:

You invest: ₹25 lakh
4% per year: ₹1 lakh
Monthly SWP: ₹8,333

Let it grow first

Don’t start taking withdrawals right after you invest. Let your money grow for at least 1-2 years. This builds a bigger base for you to withdraw from later.

Only take what you need.

Just because you can withdraw a certain amount doesn’t mean you should. Take what you need and let the rest keep growing.

Have a backup ready

What if the market crashes right when you start your SWP? Keep 1-2 years of expenses in safer investments like debt funds or FDs as a safety net.

Think about taxes

If you hold units for over 12 months, you pay 12.5% tax only on gains above ₹1.25 lakh per year.

Try to structure your SWP so you stay under ₹1.25 lakh in gains each year if you can, especially for equity funds.

Where to learn more and get started

Official mutual fund sites

SBI Mutual Fund: https://www.sbimf.com/swp-calculator
ICICI Prudential: https://www.icicipruamc.com/
Mirae Asset: https://www.miraeassetmf.co.in/mutual-fund-facilities/systematic-withdrawal-plan

Investment platforms

Groww: https://groww.in/mutual-funds/
Tickertape: https://www.smallcase.com/learn/
Moneycontrol: Track fund performance and compare

Calculators you can use

ClearTax SWP Calculator: https://cleartax.in/s/swp-calculator – See how long your investment will last
Most fund house websites have their own SWP calculators too

Learning resources

Value Research: https://www.valueresearchonline.com/ – Research and compare funds
Bank of Baroda Guide: https://www.bankofbaroda.in/banking-mantra/investment/articles/what-is-swp-in-mutual-funds – Detailed explanations
DBS Bank Guide: https://www.dbs.bank.in/in/treasures/articles/learning-centre/what-is-systematic-withdrawal-plan-swp-in-mutual-funds – Complete overview

Here’s what you need to remember

SWP is a smart way to get regular income from your mutual funds without selling everything at once. It’s tax-friendly, flexible, and your money keeps growing.

The main points:

Start with a lump sum in a good, stable mutual fund
Withdraw 4-5% per year to make your money last long-term
Pick equity funds for better taxes if you can handle some ups and downs
Check and adjust your SWP based on how it’s doing and what you need
Keep emergency money separate – don’t put everything into SWP
Use calculators to plan how long your money will last
Talk to a financial advisor for advice that fits your specific situation

Remember: SWP works great for retirees or anyone who needs extra income. Just be aware of the taxes since they affect your overall financial plan.

The most important thing? Start with the right fund, set a withdrawal rate you can maintain, and check on it regularly. Your future self will thank you for it.

Important stuff you should know

Investment risks: Mutual funds come with market risks. Read all the scheme documents carefully before investing.

Tax laws change: The tax rates I mentioned are current as of 2024-2025. Always check current tax rules before making decisions.

This isn’t financial advice: This guide is just for education. Your situation is unique. Talk to a SEBI-registered financial advisor before you invest.

Past results don’t guarantee future returns: Just because a fund did well before doesn’t mean it will do well in the future. Markets go up and down.

Do your homework: Always read the scheme information document and key information memorandum before putting money in any mutual fund.

Where this information comes from

Everything in this guide comes from verified, official sources:

Mutual fund education:

DBS Bank India – SWP Guide: https://www.dbs.bank.in/in/treasures/articles/learning-centre/what-is-systematic-withdrawal-plan-swp-in-mutual-funds
Bank of Baroda – What is SWP: https://www.bankofbaroda.in/banking-mantra/investment/articles/what-is-swp-in-mutual-funds
Mirae Asset – SWP Facility: https://www.miraeassetmf.co.in/mutual-fund-facilities/systematic-withdrawal-plan
Mirae Asset – What is SWP: https://www.miraeassetmf.co.in/knowledge-center/what-is-swp
SBI Mutual Fund – SWP Calculator: https://www.sbimf.com/swp-calculator
Smallcase – SWP Guide: https://www.smallcase.com/learn/swp-systematic-withdrawal-plans-in-mutual-funds/
Standard Chartered – SWP Overview: https://www.sc.com/in/stories/inv-scinvest-systematic-withdrawal-plan/
ClearTax – SWP Calculator: https://cleartax.in/s/swp-calculator
Bandhan Mutual Fund – SWP Guide: https://bandhanmutual.com/guides/what-is-a-systematic-withdrawal-plan-in-india/
Bajaj Finserv – SWP Explanation: https://www.bajajfinserv.in/investments/systematic-withdrawal-plan

Fund performance data: 11. Value Research Online – ICICI Pru BAF: https://www.valueresearchonline.com/funds/3906/icici-prudential-balanced-advantage-fund/ 12. Tickertape – ICICI Pru BAF: https://www.tickertape.in/mutualfunds/icici-pru-balanced-advantage-fund-M_ICCVB 13. INDmoney – ICICI Pru BAF: https://www.indmoney.com/mutual-funds/icici-prudential-balanced-advantage-fund-direct-plan-growth-4496 14. Groww – ICICI Pru BAF: https://groww.in/mutual-funds/icici-prudential-balanced-advantage-fund-direct-growth 15. Kotak Securities – ICICI Pru BAF: https://www.kotaksecurities.com/mutual-funds/icici-prudential-balanced-advantage-fund/ 16. ICICI Prudential AMC – Official Site: https://www.icicipruamc.com/

Article details:

Put together: November 2024
All data checked through official fund houses and regulatory-compliant platforms
Tax information current as of November 2024 (after July 23, 2024 changes)
Performance data as of November 2024
Minimum investment amounts and other details can change

Regulatory information: For the most current regulations and fund details, check:

SEBI (Securities and Exchange Board of India): https://www.sebi.gov.in
AMFI (Association of Mutual Funds in India): https://www.amfiindia.com
Individual fund house websites for the latest scheme documents

This guide is just for education. Always check current information and talk to qualified financial advisors before making investment decisions.