A Systematic Withdrawal Plan (SWP) is a way to generate regular monthly income from your mutual fund investments. SWP allows you to withdraw a fixed amount periodically (monthly/quarterly/annually) from your mutual fund investment. It is especially useful for those who are retired, or on a career break, or need a steady cash flow for meeting their regular expenses. Unlike traditional income sources like pensions, rental income, or fixed deposit interest, SWP offers more flexibility and along with growth potential for the invested capital money. To start an SWP, you need a lump sum amount, which could come from existing savings/investments, proceeds from property sales, retirement benefits (EPF, Gratuity), or inheritance from ancestors. This lump sum money has to be invested in a mix of suitable mutual funds. The choice of funds and withdrawal amount should be customized based on an individual’s personal financial conditions and ideally guided by a financial expert. Typically, a 6% annual withdrawal rate is recommended, allowing the remaining corpus to continue growing over time. This continued growth makes SWP sustainable and may even allow for increased withdrawals in the future to match your increasing expenses due to inflation. Monthly income remains consistent by selling fewer units when markets are high and slightly more when markets are low, based on the NAV (Net Asset Value) of the mutual fund scheme. The gains from SWP withdrawals, if any, are taxed as capital gains, making them a tax-efficient way to generate long-term income.