SWP is the most tax-efficient way to generate regular retirement income from mutual funds.
How SWP Works
You invest a lump sum in a mutual fund, then set up automatic monthly withdrawals. The fund redeems units to pay you. Remaining corpus stays invested and continues to grow. See our [SWP vs FD Interest comparison](/compare/swp-vs-fd-interest).
Tax Advantage
FD interest: 100% taxable at slab rate. SWP: Only the gains portion of each withdrawal is taxed. Example: If you withdraw ₹25,000 and ₹15,000 is your original investment being returned, only ₹10,000 is taxable. Effective tax rate: Much lower.
Safe Withdrawal Rate
The 4% rule (adjusted for India: 5-6%). ₹50L corpus → ₹25K/month SWP at 6%. If fund earns 10%, corpus grows despite withdrawals. Use our [SWP Calculator](/calculators/swp-calculator) to model scenarios.
Best Funds for SWP
Balanced Advantage / Dynamic Asset Allocation funds: Auto-adjust equity-debt based on valuations. Conservative Hybrid: 75-90% debt + 10-25% equity. Equity Savings: Tax-efficient with equity taxation on lower volatility.
SWP vs SIP: The Full Circle
SIP during working years (accumulation) → SWP during retirement (distribution). They're two phases of the same journey. See our [SIP vs SWP comparison](/compare/sip-vs-swp).