What is SWP (Systematic Withdrawal Plan)?

 The Systematic Withdrawal Plan (or SWP) is a repayment plan that allows you to withdraw a fixed amount from your fund at regular intervals. You can think of this as the complete opposite of SIP, because if SIP is an investment plan, then SWP is a retirement plan. With systematic retirement plans, you can adjust cash flow to meet your needs. You can also choose to  withdraw only the capital gains on your investment or a fixed amount. In this way you have not only invested your moneyThe money  you withdraw can  be used to reinvest in another fund or  be held by you in the form of cash. Key Features of SWP We have discussed what is SWP or Systematic Payout Plan. 

Let us know how the SWP plan works: SWP generates cash flows (income) by redeeming program shares at the specified interval.The number of shares redeemed to generate this cash flow depends on the size of the SGP and the plan's net asset value at the payout date. The example investor invests a lump sum of Rs 10.00 lakhs in a mutual fund scheme. The net asset value of the purchase  is 20 rupees; therefore 50,000 units are allocated. Suppose the investor started a monthly SWP of Rs 6,000 a year from the date of the investment  just to avoid drain charges.

Let's assume that the NAV of the program was Rs 22 in the first month of SWP. To generate Rs 6,000 the AMC redeems 272,728 units (Rs 6,000 / 22 NAV) therefore the balance units are now 49,727,272 (50,000 minus 272,728).Assuming the  NAV is 22.50, the AMC redeems 266,667 units (Rs 6,000 / 22.50 NAV) in the second month, hence the unit balance reduces to 49,460,605 (49,727.272 minus 266,667). Assuming NAV is 23.00,  AMC resolves 260.8696 units (Rs 6,000 / 23.00 NAV) and now the unit balance is reduced to 49,199.7354. This process continues each month until the end of the investor's chosen SWP period. As seen in the example above, the unit balance in the SWP plan decreases over time, but as the plan's NAV increases to a higher percentage  than the payout rate, the  value of the asset increases.To take the example above, after the third SWP payment the value of the fund is Rs 11,31,593.91 (49,199.7354 units x Rs 23 NAV) versus the investment value of Rs 10.00 lakhs: an increase in value of Rs 131,593, 91However, if the  NAV schema instead increases instead of increasing, the impact on its investment value  is Leoposite.