SWP – Systematic Withdrawal Plan

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SWP (Systematic Withdrawal Plan)

What is a systematic withdrawal plan?

SWP (Systematic Withdrawal Plan) is an great for consistent income. It gives you the opportunity to appreciate the life you have constantly needed after retirement. You can pull back money from your existing mutual fund investments at pre-determined intervals, be it weekly, monthly, quarterly, half-yearly or even every year, to make a consistent income for your necessities. You can likewise plan your investments and withdrawals in a tax-proficient manner. Therefore, giving you the possibility to procure more returns over a period, as you pull back happiness a tiny bit at a time.

Top 5 best balanced fund for SWP in India 2018

L&T India Prudence Fund

HDFC Balanced Fund

ICICI Prudential Balanced Fund

DSPBR Balanced Fund

SBI Magnum Balanced Fund

List of SWP Mutual Funds

Aditya Birla Sun Life Balanced 95 Fund – Regular Plan-Growth


Canara Robeco Balance – Regular Plan – Growth

DHFL Pramerica Balanced Advantage Fund – Growth Option

DHFL Pramerica Balanced Advantage Fund Wealth Plan- Growth Option

DHFL Pramerica Equity Income Fund – Growth Option

DSP BlackRock Balanced Fund- Regular Plan – Growth

Edelweiss Dynamic Equity Advantage Fund – Growth Option

Franklin India Balanced Fund-Growth Plan

HDFC Balanced Fund – Growth Option

HDFC Prudence Fund – Growth Option

ICICI Prudential Balanced Advantage Fund – Growth

ICICI Prudential Balanced Fund – Growth

JM Balanced Fund-Growth

L&T Dynamic Equity Fund-Regular Plan-Growth Option

L&T India Prudence Fund- Growth Option

LIC MF Balanced Fund-Growth

Principal Balanced Fund-Growth

Reliance Regular Savings Fund – Balanced Option – Growth Plan

SBI Magnum Balanced Fund – REGULAR PLAN –Growth

Sundaram Balanced Fund – Appreciation Option

Tata Balanced Fund Regular Plan – Growth

Tata Regular Savings Equity Fund -Regular Plan-Growth

UTI – Balanced Fund-Growth

Why SWP Mutual Fund?

While standard income originates from Salary, business income, FD interest, annuity, and so forth., Systematic Withdrawal Plan is utilized to supplement consistent income.

Why select Mutual Fund SWP?

Investors in India, select Mutual Fund SWP for both of the two reasons:

  1. 1) To meet living prerequisites or requirements; for the most part after their retirement.
  2. 2) For the reason for tax planning.

While retirement planning is the perfect range where Mutual Fund SWP can be exceptionally compelling, some current changes in the tax rules have helped the adequacy of Mutual Fund SWP.

The development or growth alternative is presently more favored than the dividend option (profit choice) in the domain of mutual fund investment. Instead of the dividend option, investors would now be able to change to a Systematic Withdrawal Plan (SWP). These plans permit systematic withdrawal of money at particular time intervals starting from month to month to a yearly period.

A major favorable position which investors can determine by opting for Mutual Fund SWP is that they are tax productive. No tax will be deducted on these withdrawals, moreover the real tax liability is much lower than the interest earned from bank FDs.

Advantages of SWP Mutual Fund

  • Rupee Cost Averaging: SWP can be more useful on the off chance that it is intended for a more drawn out period as it let investors take the benefit of rupee cost averaging. In Rupee cost averaging a person invest a fixed amount of money at general intervals. This guarantees the investor can purchases more shares of an investment when costs are low when they are high.
  • Tax Advantage: When investors pull back the money invested in mutual funds within a year, it draws in some measure of short-term capital gains. However when we pull back the sum through SWP, it would not draw in any tax. All the sum pulled back in the main year would be simply the capital.
  • If Investors Looking For Fixed Income its good – SWP is useful for investors who search for general income for over some stretch of time.


From the above illustrations it is abundantly certain that the SWP option of the Mutual Funds has its definite points of interest. The two major gains got from this option are again stayed upon:

SWP Mutual Fund and Regularity

Mutual Fund SWPs’ give the confirmation of getting a fixed sum at a pre-determined time recurrence. Among alternate options, recurrence and payout of the dividend paying month to month income plans are not certain or fixed beforehand. In some cases, if the fund can’t create adequate benefits, you may have no dividends to be paid. Henceforth consistently you will have distinctive sums coming in and some month there may be no money got. SWP is a definite help in such a situation.

SWP Mutual Fund its for Inflation Protection

By far most of the fixed income instruments don’t insulate the investor against the inevitable effect of inflation. The Mutual Fund SWP scores regarding generating returns to remain mindful of inflation especially is one settles on the equity fund course.

Types of SWP Mutual Fund

There are two types of SWPs

Fixed withdrawal and appreciation withdrawal

If there should be an occurrence of fixed withdrawal, Mutual Fund units worth a fixed amount are sold each month and the money is credited to the financial investor bank account. If there should arise an occurrence of gratefulness withdrawal, any gain produced using the time of investment is redeemed.

Awesome For Post-Retirement Income

The reason for a SWP is to intermittently enable you to pull back from your investments. This might be helpful when you have no normal income and are dependent on investments, for example, during your retirement. SWPs enable you to remain invested in the greater part of your corpus while letting you redeem just what you have to spend.

Units of Mutual Fund are redeemed on a first in, first out (FIFO) premise, meaning the units bought first are redeemed first. This is additionally a tax-productive way to make the most of your investments.

Tax Implication Of SWPs

The tax implications of a SWP are like the standard redemption of units of a Mutual Fund. Units are redeemed on a FIFO premise. In any case, the genuine taxes to be paid will depend upon the fund period and nature.

In the event that the units redeemed have a period short of what one year, the investor should pay short-term capital gains (STCG) tax at 15.45%. For units with a period longer than a year, there is no long term capital gains (LTCG) tax, in this way making the profits without tax where securities exchange taxes have been paid.

For the situation of a debt Mutual Fund, the STCG residency is three years and the tax is according to the investor’s slab. Units held longer than three years eligible for LTCG tax, which is indexation benefits of 20.6% .

5 Best ways to benefit under Systematic Withdrawal Plan (SWP) in Mutual Fund:

1) Retirement Plan through SWP

Extraordinary compared to other way to do retirement planning is by SWP through mutual funds. Systematic withdrawal plan is useful for investors who search for fixed income over some undefined time frame particularly Senior Citizens. Investment in debt funds, hybrid funds and balanced funds can gain more and you can pull back at consistent intervals. In any case, first priority can be given to Bank FD, POMIS and so forth., which gives fixed income. Some portion of their investment can be in hybrid funds and SWP through such funds would help them to supplement general income. Such seniors can search for investing in hybrid funds like ICICI Balanced fund, HDFC Balanced fund, HDFC Prudence fund and debt funds like ICICI Pru long term fund, TATA Dynamic bond fund and other good funds.

2) SWP – Disciplined withdrawal savings

If got Lump sum amount by pay or provident fund, through chit fund and so forth., You need to use this sum each month for month to month costs at home for a half year to 1 year instead of spending it in one go. In such case most ideal path is to invest in liquid funds or ultra short term debt funds and withdrawing through SWP consistently. Liquid funds or ultra short term funds are those where you can sell quickly and utilize your investment.

3) SWP – Monthly Income Plans

Investment in Monthly Income Plan (MIP) Mutual Funds would give standard income to you  Be that as it may, on the off chance that you can invest in growth option of MIP and pull back fixed income through SWP, investor can gain more. The long term the term of investment, the more returns you would get profit. This is a superior option than POMIS or dividend option of MIP Mutual funds. MIP mutual funds give 8% to 11% annualized returns, thus these are superior to POMIS or bank FDs. Investors can choose top MIP Mutual funds like HDFC MF MIP or SBI Magnum MIP and others.

4) SWP from debt mutual funds

If Investor lower risk profile, the most better way to invest your lump sum money is investing in long term debt mutual funds. This can be SWP from debt mutual funds and withdraw at standard intervals. While you would get 8% to 10% returns, you would appreciate significantly higher returns through this approach.

5) SWP through Hybrid funds

In a current examination from one of the best financial site, SWP from Hybrid funds are better in 5 to 8 years time span than SWP in debt funds or SWP from equity funds. Hybrid funds invest 65% in equity and balance in debt related instruments, subsequently drawback is restricted contrasted with equity funds. Hybrid funds have been performing great and offered 12% to 16% annualized returns in last 8 to 10 years. On the off chance that you can go out on a risk, invest in hybrid funds and SWP to withdraw your mutual fund investment at consistent intervals.


Longer you remain in mutual funds, you would profit more. Utilize SWP just to additional income and not for general income. On the off chance that you need to use SWP for short term, invest in liquid and ultra short term debt funds and do SWP. In the event that you need to utilize SWP for medium to long term, better to invest in hybrid/balanced funds or long term debt funds and continue SWP at regular intervals of period.

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