SWP: Here's how to generate ₹50,000 per month as steady income while keeping your corpus invested

A systematic withdrawal plan (SWP) is a feature for mutual fund investors, which allows them to withdraw fixed amounts at regular intervals, while still keeping the corpus invested. It is a popular method of monthly or quarterly “encashment” for retired individuals or for supplemental cash flow, as per a Clear Tax report.

Thus, it allows you to generate monthly or quarterly income (as per your choice) while keeping the remaining corpus invested. It is among the most practical choices for individuals looking to maintain steady income after retirement and can be paused, modified, or stopped at any time, depending on your requirements.

How does an SWP work for investors?

From point of view of your bank balance, the SWP withdrawal can be described as being similar to your pension payout, or dividend amounts. When it comes to your investment, units are sold as per standing instruction to provide your income.

For example, if your set withdrawal amount is ₹10,000 per month, and if the net asset value (NAV) on the particular date is ₹20, a total of 500 units will be sold from your mutual fund portfolio to provide the requested amount. The units sold will fluctuate depending on the NAV.

The big benefit of this scheme is that it allows management of expenses without impacting the entire corpus, giving flexibility in how much you withdraw and how much you choose to keep invested. It facilitates financial discipline even during the withdrawal phase.

SWPs are tax-efficient compared to interest income from traditional options as it removes the pressure of lumpsum credit into your account. Here, only the capital gains portion of each withdrawal is subject to tax — i.e. of the ₹10,000 withdrawal, the ₹2,000 interest earned is the amount that is subject to tax.

How to generate ₹50,000 monthly income with SWP

Today, we explain how much you would have to invest in a systematic withdrawal plan (SWP) in order to receive ₹50,000 per month as steady income after retirement, while keeping your corpus invested.

Assuming you retire at 60 years of age and plan to receive SWP income till 65 (five years), 70 (10 years), 75 (15 years), 80 (20 years), 85 (25 years) or 90 (30 years), you will have to invest the following amounts:

• To generate income of ₹50,000 per month for five-year period (till 65 years of age) you will have to invest ₹25 lakh lumpsum at 8-12% interest.
• To generate income of ₹50,000 per month for 10-year period (till 70 years of age) you will have to invest ₹43 lakh lumpsum at 8% interest.
• To generate income of ₹50,000 per month for 10-year period (till 70 years of age) you will have to invest ₹40 lakh lumpsum at 10% interest.
• To generate income of ₹50,000 per month for 10-year period (till 70 years of age) you will have to invest ₹37 lakh lumpsum at 12% interest.

• To generate income of ₹50,000 per month for 15-year period (till 75 years of age) you will have to invest ₹55 lakh lumpsum at 8% interest.
• To generate income of ₹50,000 per month for 15-year period (till 75 years of age) you will have to invest ₹50 lakh lumpsum at 10% interest.
• To generate income of ₹50,000 per month for 15-year period (till 75 years of age) you will have to invest ₹45 lakh lumpsum at 12% interest.
• To generate income of ₹50,000 per month for 20-year period (till 80 years of age) you will have to invest ₹63 lakh lumpsum at 8% interest.
• To generate income of ₹50,000 per month for 20-year period (till 80 years of age) you will have to invest ₹55 lakh lumpsum at 10% interest.
• To generate income of ₹50,000 per month for 20-year period (till 80 years of age) you will have to invest ₹50 lakh lumpsum at 12% interest.

• To generate income of ₹50,000 per month for 25-year period (till 85 years of age) you will have to invest ₹68 lakh lumpsum at 8% interest.
• To generate income of ₹50,000 per month for 25-year period (till 85 years of age) you will have to invest ₹59 lakh lumpsum at 10% interest.
• To generate income of ₹50,000 per month for 25-year period (till 85 years of age) you will have to invest ₹51 lakh lumpsum at 12% interest.
• To generate income of ₹50,000 per month for 30-year period (till 90 years of age) you will have to invest ₹72 lakh at lumpsum 8% interest.
• To generate income of ₹50,000 per month for 30-year period (till 90 years of age) you will have to invest ₹61 lakh at lumpsum 10% interest.
• To generate income of ₹50,000 per month for 30-year period (till 90 years of age) you will have to invest ₹55 lakh at lumpsum 12% interest.

Notably, for its convenience, most ordinary investors choose the systematic investment plan (SIP) route to build a sizeable corpus in mutual fund instruments by being consistent over a long-term. Once the corpus fund is in place, and either at a desired time in your life, or during retirement, this fund can be set to disburse a fixed amount on monthly or quarterly basis under SWP, as per your needs.

Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.