A Systematic Withdrawal Plan (SWP) offers investors a method to ensure regular income by withdrawing a fixed amount monthly from their mutual fund investment.
Let’s understand how this works using a scenario where an investor has made a lump-sum investment of ₹50 lakh, with an expected annual return of 12%, and plans to withdraw ₹50,000 every month for 25 years.
A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investment at regular intervals. This option is useful for investors looking to receive a steady income while keeping their invested capital intact. The withdrawals can be made monthly, quarterly, or annually, depending on the investor’s needs.
In this scenario, an investor starts with a lump sum investment of ₹50 lakh in a mutual fund that provides an expected return of 12% annualised. The goal is to withdraw ₹50,000 per month from this investment.
Let’s break down the key figures and see how the investment performs, based on the SWP Calculator
Over time, the initial investment grows with the expected return, and withdrawals are made each month. The idea is to ensure that the funds last for the entire 25-year period while also generating enough growth to cover the monthly withdrawals.
The total amount withdrawn over the 25 years would be:
This is the amount the investor expects to withdraw over the entire 25-year period.
After the 25-year period, the remaining value of the investment, taking into account the regular withdrawals and the expected returns, will be ₹6,89,997.
This means that even after withdrawing ₹50,000 per month for 25 years, the investor will still have ₹6,89,997 left in the account, demonstrating the power of compounding returns.
Read More: SWP Calculator: See How a ₹3.99 Lakh Lump Sum Can Generate ₹67,000 Monthly Income for 30 Yrs!
One of the key benefits of an SWP is the ability to generate a regular income without having to sell your investments. With a consistent withdrawal plan, investors can ensure a steady cash flow while keeping their principal investment growing at a healthy rate.
A lump-sum investment of ₹50 lakh in a mutual fund with a 12% return can provide ₹50,000 per month for 25 years under an SWP, with ₹689,997 remaining at the end. This highlights the effectiveness of SWP in ensuring long-term income while maintaining the principal investment.
Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: Sep 2, 2025, 4:06 PM IST
Team Angel One
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