SIP + SWP Calculator

What Is SIP + SWP and Why Use Both?

A complete investment lifecycle has two phases: the accumulation phase (building wealth through SIP) and the distribution phase (drawing income through SWP). Using both tools together allows you to plan a full retirement strategy in one place.

SIP (Systematic Investment Plan)

SIP is a method of investing a fixed amount in a mutual fund at regular intervals (monthly). It benefits from rupee cost averaging — buying more units when NAV is low and fewer when high. Over 15–25 years, the compounding effect on equity fund returns (12–15% historical CAGR) can multiply your investment 8–20×.

SWP (Systematic Withdrawal Plan)

SWP is the reverse — you withdraw a fixed amount monthly from your accumulated corpus. The remaining corpus continues earning returns. With a well-sized corpus and reasonable withdrawal rate, you can create a perpetual income stream that outlasts your retirement.

The 4% Rule — Is Your SWP Sustainable?

The "4% rule" (from Trinity Study) says withdrawing 4% of your corpus annually (i.e., 0.33% monthly) is sustainable for 30 years at a ~7% real return. At 8% nominal return with 6% inflation (2% real), a withdrawal of 2% of corpus annually is perpetual.

Example: A corpus of ₹2 crore at 8% return → max perpetual monthly SWP ≈ ₹2Cr × 8% ÷ 12 = ₹1,33,333/month (if you withdraw exactly the interest earned).

Tax on SWP Withdrawals

• Equity MF: LTCG (holding >1 year) at 10% above ₹1L/year. STCG at 15%.
• Debt MF: Taxed at your income tax slab rate (no indexation benefit from FY24).
• Only the gain component of each SWP is taxable, not the principal. Each redemption is partly principal + partly gain.