Glossary· Ways of investing
What is SWP?
Also known as Systematic Withdrawal Plan
A fixed amount redeemed on a schedule — a SIP in reverse.
The usual way to draw an income from a corpus. Each withdrawal is a redemption, so each one is a taxable event under FIFO, and withdrawing faster than the fund grows will exhaust it.
For the formula and the constants behind this figure, see Methodology.
Guides that use SWP
10 guides put this term to work.
- SWP: creating your own monthly pensionWhy a withdrawal plan beats an IDCW payout on tax and on control, how each instalment is taxed, and the sequence risk that decides whether the money lasts.
- Dividend yield funds: do high-dividend stocks make better funds?A value strategy wearing an income costume. Why the dividends land in the NAV rather than your bank account, and why an SWP beats this for cash flow.
- The 4% rule vs an SWP: funding early retirement in IndiaThe rule answers a US question — 30 years, US inflation, no tax. Re-deriving it for a 45-year Indian retirement lands closer to 3–3.5%, or roughly 29× spending.
- Building multi-generational wealth with mutual fundsWealth survives through structure, documentation and conversation rather than returns — and funds are divisible, professionally managed and easy to pass on.
- Building a passive income stream from mutual fundsNever through IDCW, which hands back your own capital at slab rate. An SWP taxes only the gain portion — plus the bucket structure that survives a bad market.
- Sequence-of-returns risk: why the order of returns decides retirementReal Indian market history: the same fund, the same 5% withdrawal — ₹24.8 lakh left if you retired into the 2008 crash, ₹2.07 crore if you retired two years on.
- Your master plan: a 30-year wealth blueprintThe five decisions that determine the outcome, ranked — fund selection comes fifth — the blueprint by life phase, and the seven-line policy statement to write.
- SCSS: the retiree's income floor, and the joint-account trapUp to ₹30 lakh per person into a guaranteed quarterly income. Two individual accounts beat one joint account, and the interest is taxable at slab.
- What an annuity actually pays, and why the NPS forces you to buy oneYou are buying longevity insurance, not returns — at a low rate, fixed for life, taxed at slab. Annuitise the minimum, because it cannot be undone.
- Which pot to draw first: the withdrawal order nobody teachesGuaranteed income first, then a cash buffer so you never sell equity into a fall, using the annual exemption every year — and the tax-free pots last.
More on ways of investing
The transaction types the calculators model.
- SIP
- A fixed amount invested on a fixed date, usually monthly.
- Step-up SIP
- A SIP whose instalment rises by a set percentage each year.
- Lumpsum
- A single one-time investment.
- STP
- A scheduled move from one scheme to another within the same fund house.