How to Use Systematic Withdrawal Plan (SWP) for Regular Monthly Income
June 28, 2025
How to Use Systematic Withdrawal Plan (SWP) for Regular Monthly Income
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🏦 How to Use a Systematic Withdrawal Plan (SWP) for Regular Monthly Income
When planning for a steady income after retirement or during a career break, many investors face a crucial question:
“Should I invest in property for rent or choose mutual funds for monthly income?”
Enter the Systematic Withdrawal Plan (SWP)—a powerful yet underutilized tool that offers monthly cash flow, long-term growth, and flexibility, all in one.
Let’s understand how it works with a real example and compare it with investing in residential real estate.
💡 What is a Systematic Withdrawal Plan (SWP)?
A Systematic Withdrawal Plan is a mutual fund feature that allows investors to withdraw a fixed amount at regular intervals (monthly, quarterly, etc.) from their investment, while the remaining capital continues to grow.
Think of it like earning a salary from your investments, without the need to break your Fixed Deposits or sell your assets.
🧮 Case Study: ₹50 Lakh Investment | ₹40,000 Monthly Income | 20 Years
Let’s assume:
- You invest ₹50,00,000 in a mutual fund portfolio.
- You withdraw ₹40,000 every month via SWP.
- The mutual fund grows at an average annual rate of 12% (compounded monthly).
- Time horizon: 20 years (240 months)
🔢 What Happens Over 20 Years?
| Details | Amount |
|---|---|
| 💸 Total Withdrawals | ₹96,00,000 (₹40,000 x 240 months) |
| 📈 Fund Value after 20 years | ₹2,07,32,252 |
| 🧾 Total Wealth Created | ₹3.03 Cr (₹2.07 Cr corpus + ₹96 L withdrawn) |
Despite taking out ₹96 lakh, your fund more than quadruples in value!
That’s the power of compounding + smart withdrawals.
📊 Year-Wise Fund Value Illustration
| Year | Total Withdrawals | Fund Value at Year-End |
|---|---|---|
| Year 1 | ₹4.8 Lakh | ₹52.6 Lakh |
| Year 5 | ₹24 Lakh | ₹61.2 Lakh |
| Year 10 | ₹48 Lakh | ₹83.4 Lakh |
| Year 15 | ₹72 Lakh | ₹1.28 Crore |
| Year 20 | ₹96 Lakh | ₹2.07 Crore ✅ |
Even after 20 years, the corpus grows without depletion.
🏠 SWP vs Residential Property: A Real Comparison
Let’s compare this with a ₹50 lakh residential flat rented out for passive income.
| Factor | SWP (Mutual Fund) | Real Estate Property |
|---|---|---|
| Initial Investment | ₹50,00,000 | ₹50,00,000 |
| Monthly Income | ₹40,000 (customizable) | ₹12,000–₹15,000 (2–3% yield) |
| Liquidity | High – Redeem anytime | Low – Difficult to sell quickly |
| Maintenance | None | Regular repairs, upkeep costs |
| Taxation | Capital Gains (10%) after indexation | Rental income taxed at slab rate |
| Wealth after 20 years | ₹3.03 Cr (incl. withdrawals) | ₹1.5–1.8 Cr (appreciated value) |
| Flexibility | High | Low |
🔐 Why SWP is the Smart Choice
✅ Stable Monthly Income – Just like rent, but better.
✅ Higher Wealth Creation – Grows much faster than real estate.
✅ No Hassles – No tenants, brokers, repairs, or legal issues.
✅ Tax Efficient – Capital gains are taxed lower than rental income.
✅ Complete Flexibility – Withdraw more or less, anytime.
🧠 Pro Tip: Add Emergency Buffer
Keep 6–12 months of SWP income in a liquid or ultra-short fund, so you never have to withdraw from equity funds in a down market.
📌 Final Thoughts
If you're looking for a monthly income solution that’s flexible, inflation-beating, and tax-efficient, an SWP from equity mutual funds may be far superior to investing in real estate.
In the long run, SWPs not only give you income—they help you grow your wealth while you spend it
Want to Set Up an SWP Strategy?
At Prospera Wealth, we help you:
- Choose the right mutual funds
- Decide the ideal SWP amount
- Plan taxes smartly
- Create a stress-free income plan
📞 Call: 7030651651
📩 Email: info@prosperawealth.in
🌐 Visit: www.prosperawealth.in
Let’s turn your investments into income that lasts.