After retirement, regular monthly inflows through salary came to an end. In this case, individuals are looking to start a new monthly income through different sources. One of such methods is the Systematic Withdrawal Plan offered by a mutual fund.
In today’s blog post, we will give you an overview of the best SWP for monthly income in India, along with the factors to consider before choosing a SWP plan.
What is a Systematic Withdrawal Plan?
Systematic Withdrawal Plan is an option offered by mutual funds which allows an investor to withdraw a fixed sum of money from a mutual fund scheme at a regular interval, such as monthly, quarterly, etc. It acts as a regular stream of income for a retiree; a certain sum of money is withdrawn, while the remaining amount continues to grow based on market returns. SWP does not guarantee income. Withdrawals continue regardless of market conditions, which can erode capital during prolonged downturns.
Key Features of Systematic Withdrawal Plan
The key features of a systematic withdrawal plan are as follows:
- Regular Income: SWP allows an investor to withdraw a regular sum of money from their investments at regular intervals, such as monthly or quarterly.
- Flexibility: Investors have the option to decide the amount of money which they wish to withdraw based on their needs.
- Higher Returns: The amount invested in the fund continues to increase over time, and the returns are linked to the market.
- Tax Efficient: Unlike other investment options, such as bank fixed deposits, etc., which are taxed based on the investor’s tax slab, gains from SWP are taxed as capital gain, which makes it a more efficient investment option.
Best Mutual Funds for SWP in 2026
- ICICI Prudential Balanced Advantage Fund
- Axis Equity Saving Fund
- Kotak Multi Asset Allocation Fund
- SBI Equity Hybrid Fund
- ABSL Balanced Advantage Fund
Read Also: Best Annuity Plans in India
Overview of the Best SWP for Monthly Income in India for 2025
The overview of best SWP for monthly income in India for 2025 is as follows:
1. ICICI Prudential Balanced Advantage Fund
This fund uses an intelligent method of investing by switching dynamically between equity and debt according to market conditions. It lowers equity exposure to control risk when markets are high and it increases equity allocation to capture growth when valuations are lower. The approach does not only minimize volatility but also intends to increase long-term capital appreciation and thus it is well applicable to investors with a moderate risk appetite and long-term investment horizon.
2. Axis Equity Saving Fund
Axis Equity Saving Fund was introduced on 14 August 2015 and targets investors seeking a more conservative hybrid fund. It incorporates equity, debt, and arbitrage approach in order to seek consistent and relatively smooth returns which make it appropriate to new investors or seeking to diversify low volatility returns relative to pure equity funds. Through arbitrage opportunities and fixed-income investments, it aims at achieving a small capital growth with an balance risk profile between equity and debt.
3. Kotak Multi Asset Allocation Fund
It is a relatively new multi-asset fund in the hybrid category, having been introduced on 22 September 2023. Kotak Multi Asset Allocation Fund manages your money in equity, debt, and commodities (such as gold) so that you are diversified in one portfolio. Since it has significant exposure to various asset classes, it seeks to strike a balance between growth prospects and risk control, which makes it suitable to investors who desire widespread diversification and do not want to operate multiple funds individually.
4. SBI Equity Hybrid Fund
SBI Equity Hybrid Fund has a long history, having existed since December 1995, a fact that makes it one of the oldest hybrid mutual funds in India. It is a mix of equity and debt investments with a view to long term capital growth at reduced volatility compared to pure equity funds. The fund suits investors with a balanced portfolio strategy by investing most of their funds in growth stocks and some in fixed-income securities over the long-term and the medium-term.
5. ABSL Balanced Hybrid Fund
ABSL Balanced Hybrid Fund with its inception date in April 2000 and is also among the oldest hybrid mutual funds in India. It is a mix of equity and debt investments with a view to long term capital growth at reduced volatility compared to pure equity funds. The fund will suit investors looking to pursue a balanced portfolio strategy over the medium-to-long term by investing a greater percentage in growth stocks and a smaller percentage in fixed-income securities.
| Funds | NAV (INR) | AUM (INR Cr.) | 1 Yr CAGR Return | 3 Yr CAGR Return | 5 Yr CAGR Return | Expense Ratio |
|---|---|---|---|---|---|---|
| ICICI Prudential Balanced Advantage Fund | 76.35 | 70,500 | 11.62% | 13.10% | 12.03% | 1.43% |
| Axis Equity Savings Fund | 22.43 | 925 | 5.50% | 9.79% | 8.15% | 2.27% |
| Kotak Multi Asset Allocation Fund | 16.14 | 9,850 | 29.83% | – | – | 1.70% |
| SBI Equity Hybrid Fund | 301.45 | 82,850 | 11.22% | 13.75% | 12.28% | 1.38% |
| ABSL Balanced Advantage Fund | 107.68 | 8,800 | 8.99% | 12.35% | 10.64% | 1.76% |
Read Also: 10+ Best Investment Plan for Monthly Income in India
Benefits of SWP for Monthly Income in India
The key benefits of SWP for monthly income in India are as follows:
- Regular Income : It provides a pre-defined monthly withdrawal cash flow, which makes it easy for an investor to manage their expenses.
- Growth Potential : The withdrawals are made from the initial investment by the investors. However, the remaining amount left after the monthly withdrawal kept on increasing based on market returns over time.
- Liquidity : SWPs also offer liquidity, as the remaining corpus can be withdrawn anytime by the investor.
- No TDS : In SWPs, no taxes are deducted by the asset management at the source of income. All the gains are taxable based on the capital gain tax rate.
Risk of SWP for Monthly Income in India
The key risks of investing in SWP for monthly incomes in India are as follows:
- Market Risk : The returns in SWP are linked with the market. If the market is underperforming, the funds will not perform well, and their value can decline for a particular period of time.
- Interest Rate and Credit Risk : If you are investing in a debt fund for SWP, there might be risk related to interest rates and credit.
- Capital Erosion : If the systematic withdrawals are not planned properly, then the initial capital will be eroded or exhausted over time.
Factors to consider before investing in SWP
The key factors that an investor should consider before investing in a SWP for monthly income are as follows:
- Withdrawal Amount : The investor should withdraw a sustainable amount; if the withdrawal amount exceeds the average return of the fund, it will erode capital.
- Frequency of Withdrawal : One should select the frequency of withdrawal based on their income needs. The frequency can vary from monthly, quarterly, half-yearly, etc.
- Expense Ratio : If the fund is having a higher expense ratio, then it will reduce the overall return over time. Hence, one should select the fund which has a lower expense ratio.
Read Also: Types of Investment in the Stock Market
Who should invest in SWP?
The SWP plan for monthly income is suitable for the following investors:
- Retired Individuals : SWP for monthly income is suitable for retirees who are looking for a regular monthly income even after retirement.
- Tax-Efficient Income Option : Investors who are looking for tax-efficient investment options can consider SWP, as they are taxed based on capital gain rules, instead of the tax slab of an individual.
- Liquidity : Investment in SWP offers liquidity for an investor as they can withdraw the remaining corpus at anytime based on their need.
Conclusion
On a concluding note, a systematic withdrawal plan helps an individual in planning their retirement efficiently by allowing them to withdraw a fixed sum of money at a regular interval. There are various schemes in mutual funds from which you can withdraw money through SWP, but choosing the right fund depends on the investor’s risk profile and the requirement for money. A well-planned SWP helps an investor in planning their retirement efficiently without exhausting their capital. However, it is advisable to consult your investment advisor before choosing a fund for SWP withdrawals.
Frequently Asked Questions (FAQs)
What is the full form of SWP in a mutual fund?
The full form of SWP is Systematic Withdrawal Plan, offered by mutual fund companies, through which one can withdraw a fixed sum of money at a regular interval.
How are SWPs taxed in India?
In India SWPs withdrawals are taxed as per capital gain, not based on the income tax slab of an individual.
Can I stop or change the amount of withdrawal from SWP?
Yes, you can stop or change the amount of withdrawal from SWP anytime.
Is it possible that the capital gets exhausted in an SWP?
Yes, if the monthly withdrawal amount is high and the market is not performing well, then in the longterm the capital gets exhausted.
Can I start SWP immediately after investing in a mutual fund?
Yes, you can start SWP immediately after investing in a mutual fund. However, it is advisable to initiate SWP after one year of investment to avoid short-term capital gain and exit loads, if any.
