Systematic Withdrawal Plan: The idea of generating Rs 1 lakh monthly via a mutual fund may sound unrealistic at the start. However, when you get to the core and break the two distinctive phases, you will be able to understand how this could be possible. On that note, let’s quickly talk about a systematic withdrawal plan, the one that could help you generate a Rs 1 lakh monthly income.
You must be familiar with a systematic investment plan, which is popularly known as SIP. It is a disciplined, automated method for investing fixed amounts (as low as Rs 100–Rs 500) into mutual funds at regular intervals (daily, weekly, monthly). It facilitates rupee cost averaging, buying more units when prices are low, and builds wealth over time through compounding. Now let’s talk about SWP and understand its function.
Recently, a systematic withdrawal plan from a mutual fund has gained traction among investors who are looking for regular income.
A Systematic Withdrawal Plan (SWP) is a mutual fund facility allowing investors to withdraw a fixed or variable amount at regular intervals (monthly, quarterly, annually). It acts as a reverse of a SIP, providing a steady income stream while the remaining investment continues to grow. It is ideal for retirees or those seeking regular cash flow, often offering higher tax efficiency compared to traditional interest-bearing options.
SIP calculation: How to turn Rs 5 lakh into a sizeable corpus
Assume an investor invests a lump sum of Rs 5 lakh in equity mutual funds delivering an annualised return of 12 per cent.
- Investment horizon: 30 years
- Investment amount (Lump sum): Rs 5 lakh
- Annualised return: 12 per cent
How much could you generate with Rs 5 lakh lump sum investment?
The investment amount during the period will be Rs 5 lakh, the estimated return would be Rs 1,44,79,961, and the estimated total corpus in 30 years could be Rs 1,49,79,961.
SWP Plan: How to generate Rs 1 lakh monthly income via mutual fund
If you make a one-time investment of Rs 5 lakh in a reputable equity mutual fund and maintain this investment for 30 years, and if this investment generates an average annual return of 12 per cent, the investment could approximately generate Rs 1.50 crore in 30 years. Then, if you implement a systematic withdrawal plan (SWP) on this total corpus generated via a mutual fund every month, you could earn Rs 1 lakh per month, assuming that the selected mutual fund continues to generate an average return of 12 per cent. Here is how your investment could grow. Take a look at the calculation.
- Using SWP to generate monthly income
- Once the corpus reaches Rs 1.5 crore, the investor can initiate a Systematic Withdrawal Plan (SWP).
- Corpus: Rs 1.5 crore
- Monthly withdrawal: Rs 1 lakh
- Return: 12% annually
- Duration: 30 years
SWP calculation: Where most investors go wrong
Many assume Rs 5 lakh can directly generate Rs 1 lakh monthly income. In reality:
Without compounding, Rs 5 lakh would be exhausted within months
Even a Rs 48 lakh corpus (after 20 years) cannot sustain such withdrawals
The time factor, not just return, is the real game changer.
A Rs 5 lakh investment can eventually support Rs 1 lakh monthly income, but only if:
- It is allowed to compound for long periods (25–30 years)
- A large enough corpus (Rs 1 crore+) is built first
- Withdrawals are lower than or aligned with returns
Top equity mutual funds with high returns
Here are the names of some of the mutual funds with over 20% return.
Edelweiss Mid Cap Fund – Direct Plan
- Launch Date: 01-Jan-2013
- Benchmark: NIFTY Midcap 150 TRI
- AUM: Rs 13,554 Cr (As on 31-Mar-2026)
- NAV: Rs 124.6120 (As on 6-May-2026)
- Expense Ratio: 0.46% (As on 28-Feb-2026)
- CAGR 5 years: 22.90%
- CAGR 10 years: 20.62%
- Min. Investment: Rs 100
- Min. SIP Investment: Rs 100
- Sharpe Ratio: 1.31
- Standard Deviation: 15.34
- Beta: 0.93
Bandhan Large & Mid Cap Fund – Direct Plan
- Launch Date: 01-Jan-2013
- Benchmark: NIFTY Large Midcap 250 TRI
- AUM: Rs 14,780 Cr (As on 28-Feb-2026)
- NAV: Rs 164.4240 (As on 6-May-2026)
- Expense Ratio: 0.54% (As on 28-Feb-2026)
- CAGR 5 years: 20.67%
- CAGR 10 years: 18.10%
- Min. Investment: Rs 1,000
- Min. SIP Investment: Rs 100
- Sharpe Ratio: 1.34
- Standard Deviation: 13.22
- Beta: 1.02
Parag Parikh Flexi Cap Fund – Direct Plan
- Launch Date: 24-May-2013
- Benchmark: NIFTY 500 TRI
- AUM: Rs 1,34,253 Cr (As on 28-Feb-2026)
- NAV: Rs 86.4452 (As on 27-Mar-2026)
- Expense Ratio: 0.63% (As on 28-Feb-2026)
- CAGR 5 years: 16.86%
- CAGR 10 years: 17.75%
- Min. Investment: Rs 1,000
- Min. SIP Investment: Rs 1,000
- Sharpe Ratio: 1.58
- Standard Deviation: 8.46
- Beta: 0.60
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
