Explained: How To Set Up An SWP In a Mutual Fund?

A systematic investment plan (SIP) is the antithesis of a systematic withdrawal plan (SWP). It gives you the ability to generate a string of receivables from your investment in a mutual fund on a predetermined schedule at regular intervals. In contrast to withdrawals made in one large sum, investors will be able to tailor the manner in which they make withdrawals first from the corpus using SWP. It is very easy to use an SWP mutual fund calculator online and get the details. 


You have the option of withdrawing either the capital gain or a predetermined sum while the remainder is put back into the program. You will be able to maintain your investment for a significant amount of time and still generate a consistent income in this manner. The receipt has the capability of either being reinvested or utilized to fulfill cash requirements.

How does an SWMP work?


To commence an SWP, you will typically be required to fill out an SWP form. Alternatively, you could apply to an SWP by visiting the official website of the mutual fund. All you need to do is run the SWP mutual fund calculator online. 


For SWPs, there are 2 possible courses of action:

Fixed Periodic Withdrawal: This feature enables you to take out a predetermined amount at predetermined times. At the predetermined time, the number of units that are comparable to the SWP amount is redeemed, and the resulting funds are deposited into your bank account.


 Appreciation Withdrawal: This particular SWP allows for the withdrawal of only the profits or appreciation that have accrued just on funds. You have the opportunity to describe the frequency of withdrawals from the fund; for instance, if you invested Rs. 20 lakh in such a mutual fund, but it appreciates by 1.5% every month, then you choose a month-to-month SWP, you could have a credit of Rs.30,000 from your financing every month in your bank account. This is an instance of how you could clarify the frequency of withdrawals from the fund.


How to set up SWP in mutual funds

Step1: Decide how much money you want to put into the venture;


Step 2: Select the appropriate debt funds


Step 3: Select the Time Interval to Be Used


Step 4: Choose the monthly investment.


Once you enter these details in the SWP in mutual fund calculator, you will get the details like return and all. 


Levying of taxes on withdrawals made through SWP

The typical redemption of units by employing the SWP feature results in taxable income for the investor. If you already have investments in equity investments and also have held them for less than a year, any short-term profits you realize as a result of selling such funds through an SWP will be subject to the 15% short-term capital gains tax. Gains of almost Rs 100,000 that are realized after an investment has been held for more than a year are subject to a long-term capital gains tax of 10% without indexation if, indeed, the investment has been held for more than a year.



Investors enjoy the freedom to choose another amount, date, and frequency of withdrawals from an SWP plan so that they can tailor the plan to meet their specific needs. In addition, a shareholder can terminate the SWP at any moment and contribute new amounts towards the fund at any point.


Regular income

SWP makes it possible for investors in mutual funds to get consistent returns on invested capital. Consequently, investors who require a consistent cash flow for meeting day-to-day expenses, such as retired investors, may find it beneficial to participate in SWP systems. Use an SWP mutual fund calculator online to get precise details on investment and returns. 



Whenever handled correctly, SWPs are helpful and successful. However, when handled incorrectly, they can have terrible effects. If you want to be completely secure in your capacity to maintain your level of life as well as leave a financial legacy to the heirs once you retire, it is necessary to think about all of the different retirement income plans that are available and to seek the advice of an experienced specialist.