Everyone has unique financial needs, which is why your investment strategy should align with your personal goals. You might prefer making a lump sum investment or, instead, spreading your contributions over time through a systematic plan.
Some investors focus on capital growth and some want a regular income. If you’re looking for both growth and steady income, mutual fund companies offer a solution through a Systematic Withdrawal Plan.
In this blog, we’ll help you understand how an SWP works and introduce you to some of the best SWP mutual funds that can support a Rs 1 lakh monthly SWP effectively.
What is an SWP?
A SWP allows investors to withdraw a specific amount from their mutual fund investment at regular intervals. You can decide the amount and the frequency of withdrawals.
You also have the option to withdraw only the gains or capital appreciation and leave the original investment untouched. On the selected date, the required number of units are redeemed, and the money is transferred to your account.
An SWP offers a reliable way to access your investment returns systematically and is a great choice for those who need consistent income without compromising their capital.
A major challenge with SWPs is the risk of gradually depleting your investment. However, by ensuring that your withdrawal amount remains lower than your investment’s growth rate, you can sustain your income as well as grow your portfolio over time.
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Here is a list of best SWP options for monthly income that have the ability to provide an SWP of Rs 100000 per month for at least 9 to 10 years with a total investment of just Rs 50,00,000:
|
Scheme Name
|
AMC Name
|
Launch Date
|
Return XIRR %
|
|
SBI Equity Hybrid Reg Gr
|
SBIMF
|
01-12-1995
|
18.97
|
|
ICICI Pru Equity & Debt Gr
|
ICICIMF
|
05-11-1999
|
18.53
|
|
HDFC Hybrid Equity Gr
|
HDFCMF
|
01-04-2005
|
17.86
|
|
Tata Hybrid Equity Reg Gr
|
TataMF
|
08-10-1995
|
17.53
|
|
Quant Absolute Fund Gr
|
QuantMF
|
21-03-2001
|
17.29
|
The SBI Equity Hybrid Fund is aimed at providing long-term capital appreciation through a strategic blend of equity and debt investments.
The fund follows a balanced investment strategy by focusing on high-growth companies through equity securities while mitigating risks with fixed-income instruments.
In terms of performance, the fund has delivered trailing returns of 24.4% over one year, 10.91% over three years, and 15.44% over five years.
The minimum investment requirement for this fund is Rs 1,000, and investors can start a SIP with as little as Rs 500. For the SWP, it can provide a total payment of 135 instalments if there is a total invested amount of Rs 50 lacs.
This mutual fund is designed to provide a combination of long-term capital appreciation and current income. The fund allocates 60–80% of its portfolio to equities and 20–40% to debt instruments.
The fund's investments are spread across multiple sectors, such as financial services, energy, automobile, healthcare, and communication for sectoral diversification.
In the SWP plan, you can make a total withdrawal of 128 times for Rs 1 lac per month with a lump sum amount of Rs 50,00,000 before you exhaust your funds.
​​​​​​​The is an aggressive mutual fund that focuses on long-term capital growth through equity investments.
This fund carries a very high risk and is suitable for investors with a higher risk tolerance. It has an expense ratio of 1.7% to cover management and operational costs.
The fund has delivered a 5-year return of 17.25% and has generated consistent growth over time.
In the SWP plan, you can make a total withdrawal of 119 times for Rs 1 lac per month with a lump sum amount of Rs 50,00,000 before you exhaust your funds.
Here are some practical strategies for making the most of an SWP:
Generating a Steady Secondary Income
Having an additional income stream has become essential as of today. Investing in an SWP can provide a reliable source of supplementary income.
Building Your Own Pension
You can create a personal pension by building a corpus five years before retirement. Invest this amount in mutual funds aligned with your risk tolerance.
Once you retire, you can initiate an SWP to receive regular income, creating a self-managed pension plan for your post-retirement needs.
Conclusion
A Systematic Withdrawal Plan is a versatile financial tool that can benefit investors. Whether you aim to create additional income, plan for retirement, or protect your capital, SWPs can be a valuable part of your financial strategy.
You can definitely consider integrating SWPs into your investment plan to meet your financial goals effectively.
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