28 Aug 2025

Best SWP Plans in Mutual Funds for 2025: How to Choose the Right One

Most investors are familiar with SIP (Systematic Investment Plan), which involves investing a fixed amount regularly to build wealth over time. But what if you already have a lump sum corpus and want a steady income flow from it? That's where SWP (Systematic Withdrawal Plan) comes in.

SWP allows you to withdraw a fixed amount at regular intervals, like monthly, quarterly, or annually, while the remaining corpus continues to earn returns.

For retirees, business owners, or anyone seeking regular income from investments, SWPs in mutual funds can be a smart strategy. Let's decode how they work, the best SWP funds in India for 2025, and what you should consider before choosing one.

What is a Systematic Withdrawal Plan (SWP) in Mutual Funds?

An SWP is a disciplined withdrawal option in mutual funds, designed to provide investors with periodic income while keeping the principal invested.

Think of it as the reverse of SIP: instead of investing monthly, you withdraw monthly while your base investment remains in the market.

This makes SWP especially useful for:

  1. Retirees who need a regular income after parking their PF/gratuity.
  2. Investors with large lump sum amounts who want both liquidity and growth.

How Does an SWP Work?

Imagine you retire at 55 with a lump sum of ₹50 lakh from PF and gratuity. If you keep it in an FD, you'll earn 7% annually, but a monthly withdrawal won't optimise returns.

Instead, if you invest via SWP in mutual funds, you can:

  1. Withdraw a fixed amount every month (say ₹50,000).
  2. Still enjoy market-linked growth on the balance.

Use the Livelong Wealth SWP Calculator to estimate how much you can safely withdraw and what your corpus will look like over time.

Example:

  1. Initial Investment: ₹50,00,000
  2. Expected CAGR: 10%
  3. Monthly Withdrawal: ₹50,000
  4. Time Period: 15 years

After 15 years of regular withdrawals (₹60 lakh in total), you'd still have ₹9.6 lakh corpus left thanks to compounding returns.

Top Benefits of SWP in Mutual Funds

  1. Regular Income Stream—Provides a monthly cash flow, ideal for retirees.
  2. Wealth Preservation—Your capital stays invested while you withdraw.
  3. Flexibility—Choose the amount, frequency, and tenure of withdrawal.
  4. Tax Efficiency—More tax-friendly than traditional FDs (depending on holding period).
  5. Market Participation—Your corpus continues to earn returns.

Best SWP Mutual Funds in India 2025

Here are some options investors may explore (based on investment style):

1. Kotak Debt Hybrid Fund

  1. Focuses on debt instruments with moderate equity exposure.
  2. A diversified portfolio reduces interest rate risk.
  3. Suitable for conservative investors seeking stability and modest growth.

2. Edelweiss Aggressive Hybrid Fund

  1. Predominantly invests in equity and some debt.
  2. Higher return potential, but also higher risk.
  3. Good for investors comfortable with volatility.

3. HDFC Hybrid Debt Fund

  1. Balanced allocation in 65-80% equity and debt securities.
  2. Diversified across sectors and market caps.
  3. Managed for both capital growth and income stability.

Note: These are illustrative options. For tailored recommendations, connect with Livelong Wealth's Mutual Fund Advisory Services.

Factors to Consider Before Choosing an SWP Plan

  1. Investment Horizon & Risk Tolerance – Match your plan to your comfort with market fluctuations and risk appetite.
  2. Fund Performance – Look for consistency in returns and resilience during volatile phases.
  3. Expense Ratio & Exit Load – Higher fees can eat into your income.
  4. Asset Allocation—Ensure a balance between equity and debt.
  5. Fund Manager Expertise – A seasoned fund manager can significantly improve fund performance.
  6. Tax Implications—Short-term vs long-term capital gains can affect net returns.

FAQs on SWP in Mutual Funds

  1. Which type of funds are best for SWPs?

Hybrid and debt funds are considered ideal due to their stability and steady returns.

  1. How do I choose the right withdrawal rate?

Keep withdrawals lower than the fund's expected CAGR. For example, with ~8% CAGR, withdrawing 5–6% annually is sustainable.

  1. Can I change the withdrawal amount in an SWP?

Yes, most AMCs allow flexibility in amount and frequency.

  1. What is the 4% SWP rule?

Ideally, withdraw 4% of your corpus annually to ensure your retirement funds last.

  1. Are SWP withdrawals taxable?

Yes. Equity withdrawals within a year attract short-term capital gains. Debt fund withdrawals under 3 years are taxed according to your income slab.

Conclusion:

The best SWP plans in mutual funds for 2025 can help you create a steady income stream without liquidating your corpus. But remember: the right SWP depends on your financial goals, time horizon, and risk appetite.

At Livelong Wealth, we help investors choose SWP funds tailored to their needs—balancing regular income, capital preservation, and long-term growth.

Looking to plan your retirement income?

Explore Livelong Wealth's Mutual Fund Advisory Services and use our SWP Calculator to start planning smart today.

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