Best SWP Plan: Hello, my dear friend, are you looking for a regular monthly income from your mutual funds without affecting your investment money?
Then you are in the right place. Do you know that in today’s financial climate, a stable monthly income has become a top priority for retirees, conservative investors, and those seeking financial independence?
With interest rates from traditional savings and fixed deposits offering limited returns, the Systematic Withdrawal Plan (SWP) has emerged as a smart and tax-efficient tool to generate regular income from mutual funds. But how do you choose the best SWP for monthly income in 2025?
This expert guide will take you through every essential detail from understanding what an SWP is, the top-performing SWP mutual funds, key evaluation criteria, income planning, tax implications, and even include comparison tables and expert tips.
Whether you’re a retiree, a working professional seeking passive income, or a financial planner, this article is your comprehensive roadmap to making the right SWP decision in 2025.
What is SWP (Systematic Withdrawal Plan)?
An SWP (Systematic Withdrawal Plan) is a facility offered by mutual funds that allows investors to withdraw a fixed amount from their investment portfolio at regular intervals, typically monthly, quarterly, or annually.
Instead of receiving lump-sum returns, you can schedule periodic withdrawals that act as monthly income. It’s like a salary from your mutual fund investments.
Key Features of SWP:
- Customizable withdrawal frequency (monthly/quarterly)
- Capital preservation with regular income
- Partial withdrawals keep the remaining corpus invested
- Tax-efficient withdrawals, especially in equity and hybrid funds
Why Choose SWP Over FD or Dividends?
| Feature | SWP (Mutual Funds) | Fixed Deposits (FDs) | Dividend Payout Mutual Funds |
| Returns | Market-linked (8–12%) | Fixed (5.5–7.5%) | Irregular & Taxed |
| Taxation | Capital gains-based | Fully taxed | Taxed as per the income slab |
| Flexibility | High | Low | Medium |
| Liquidity | High | Penalty on premature | Medium |
Expert Insight: SWP offers better returns than FDs, more control than dividend payouts, and significantly more tax efficiency, especially for long-term equity investments.
Best SWP for Monthly Income in 2025 [Top Picks]
Here are some of the most recommended and consistently performing mutual funds ideal for SWP-based monthly income in 2025.
These are selected based on 5-year performance, volatility, fund manager consistency, and NAV stability.
1. HDFC Balanced Advantage Fund
- Type: Hybrid (Equity-Debt Balanced)
- 5Y CAGR: ~11%
- Risk Level: Moderate
- Why SWP?: Low volatility, ideal for steady income and capital preservation
2. ICICI Prudential Balanced Advantage Fund
- Type: Dynamic Asset Allocation
- 5Y CAGR: ~10.8%
- Ideal Withdrawal: ₹8,000–₹10,000 monthly on ₹10L investment
- Why SWP?: The Asset allocation model reduces drawdown risk
3. SBI Equity Hybrid Fund
- Type: Aggressive Hybrid
- 5Y CAGR: ~12%
- SWP Suitability: Medium to long-term monthly income
- Strength: Strong equity upside + debt stability
4. Kotak Balanced Advantage Fund
- CAGR: ~10.5% over 5 years
- USP: Consistency in returns, low drawdown risk
5. Axis Equity Saver Fund
- Blend: Equity + Arbitrage + Debt
- SWP Focus: Ideal for ultra-conservative investors
Sample SWP Return Table (₹10 Lakhs Investment)
| Fund Name | Monthly SWP (₹) | Duration (Years) | Final Corpus (Est.) |
| HDFC Balanced Advantage | ₹8,000 | 10 | ₹9.6 Lakhs |
| ICICI Prudential Balanced Adv. | ₹10,000 | 10 | ₹8.9 Lakhs |
| SBI Equity Hybrid | ₹9,000 | 10 | ₹10.5 Lakhs |
| Axis Equity Saver Fund | ₹7,500 | 10 | ₹10.2 Lakhs |
How to Select the Best SWP for Monthly Income?
Here’s a step-by-step checklist to help you evaluate and choose the best SWP mutual fund for your monthly income needs:
1. Identify Your Income Requirement
- How much monthly income do you need? (E.g. ₹10,000/month)
- This helps you calculate how much corpus is needed.
2. Choose the Right Fund Type
- Balanced Advantage/Dynamic Funds: For moderate returns with stability
- Equity Hybrid Funds: For higher returns, moderate risk
- Debt Funds: For short-term needs or ultra-low risk appetite
3. Look at Past Performance (CAGR 5Y+)
- Opt for funds with 8–12% CAGR over the past 5 years
4. Analyze Expense Ratio
- Lower expense ratio = higher efficiency
5. Evaluate Fund Volatility
- Choose funds with stable NAV growth
6. Tax Treatment
- Equity-oriented funds: 10% LTCG tax after 1 year
- Debt funds: Taxed as per slab post 3 years (after indexation)
SWP Planning Example
Scenario: You want a ₹15,000/month income for 15 years
- Required Annual Income: ₹1.8 Lakhs
- Assumed Return (CAGR): 10%
- Corpus Required: ~₹22 Lakhs
Use a tool like Groww’s SWP Calculator to customize your withdrawal planning based on goals, returns, and investment amount.
Tax Implications of SWP
Equity-Oriented Funds:
- LTCG (After 1 Year): Taxed at 10% on gains above ₹1L/year
- STCG (Before 1 Year): Taxed at 15%
Debt-Oriented Funds:
- From 2023, the indexation benefit will be removed
- Taxed as per slab (marginal rate)
Pro Tip: Keep your withdrawal amounts within capital gains limits to enjoy tax-free benefits or stay in lower tax slabs.
Expert Tips for Maximizing SWP Benefits
- Start with hybrid funds if you’re new to mutual funds.
- Avoid withdrawing too aggressively, keep SWP < 8% of total corpus to preserve capital.
- Hold for >1 year before starting SWP to benefit from LTCG tax treatment.
- Rebalance annually to adjust for market performance.
- Don’t use SWP during high market volatility if you’re in pure equity funds.
FAQ’s about Best SWP for Monthly Income
1. Can I start SWP immediately after investing?
No, it is recommended to hold equity-oriented funds for at least 1 year before starting SWP to avoid short-term capital gains tax.
2. Is SWP better than FD for monthly income?
Yes, for long-term goals, SWP from mutual funds provides better returns, more flexibility, and tax efficiency.
3. Can SWP provide a fixed monthly income?
Yes, but the amount is withdrawn from the fund, so market performance affects corpus sustainability.
4. Which SWP fund is best for senior citizens?
ICICI Prudential Balanced Advantage Fund and HDFC Balanced Advantage Fund are ideal due to lower volatility.
5. What if markets fall during my SWP tenure?
Funds like dynamic asset allocation funds adjust exposure and reduce equity risk during downturns, protecting capital.
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Conclusion:
In a world of fluctuating interest rates and volatile markets, Systematic Withdrawal Plans (SWPs) offer an elegant and disciplined approach to generate a reliable monthly income while preserving capital.
By choosing the best SWP for monthly income, such as those from HDFC, ICICI, SBI, or Kotak, and aligning it with your financial goals, you gain both peace of mind and portfolio longevity.
Whether you’re a retiree seeking regular payouts, a freelancer wanting consistent cash flow, or a conservative investor planning passive income, SWP is your ally in 2025. Just remember: treat it like a salary from your mutual fund — plan wisely, withdraw responsibly, and let your investments do the heavy lifting.
Still unsure which fund suits your monthly needs? Speak with a certified financial planner or use online SWP calculators for personalized income planning.
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