What is SWP?
SWP exactly opposite to SIP. A Systematic Withdrawal Plan (SWP) is an investment strategy where you regularly withdraw a fixed amount from your mutual fund or investment account. It allows to receive periodic income while keeping principal invested to potentially grow over time, helping manage liquidity needs and providing consistent cash flow.
Let me share a recent story of a client who is associated with me for last 10yrs.
He is hitting 45 yrs in September and now decided to quite his regular job where is on CTC of 32L.
While he is moving out of Job, he has made a good corpus of 2.4Cr into equity Mutual fund and almost 25L in EPF.
He is well secured with Term and health insurance.
2.4Cr is quite small amount for deciding such steps, but SWP came to help him in achieving his future goal..
He is loan free and basic expenses are approx 70K per month while staying in his own house in Mumbai suburb. We decided to make the life good and set the monthly withdrawal as 90K per month..
Equity funds are giving 14-17% CAGR return in long term since ages. We considered the conservative number as 12% for working, and the number came as below which is an unbelievable digits..
– invested Corpus 2.40 Cr
– Withdrawal 90K per month
– Tenure 30 Years ( survival rate is far, but he told me to consider till 75yrs of his age)
– Expected Return 12%
– Total Withdrawal 3.24 Cr
– Corpus after 30 Years 44.43 Cr
– 12% of 2.4Cr come as 2.4 L per month, 90K got withdrawn and rest continue in the funds for add into growth with 12%
Now there are many things to debate on this data say inflation, Taxation and related stuff..be rest assured at age of 45, one has left corporate, not his life.. while following own passion, inflation money can always be managed..
Switching from the relentless grind of a 9-to-5 job to a life of freedom and passion is a dream many harbor, but few dare to realize.
At 45, he decides to leave his corporate job, stepping into a new chapter of his life with ₹2.4 crore in savings. Embracing the freedom he’s longed for, he turns to a Systematic Withdrawal Plan (SWP) to manage his finances. This plan allows him to withdraw a fixed amount regularly, ensuring a steady income stream without depleting his savings too quickly.
Now, with his SWP in place, he begins to live his passions. He travels to exotic locations, immersing himself in diverse cultures. He finally has the time to pursue hobbies like painting and writing, finding joy in creative expression. His days are filled with simple pleasures, from quiet mornings with a book and a cup of tea to adventurous treks in the mountains. By carefully managing his finances, he enjoys the freedom to live fully, savoring each moment and making the most of his newfound independence.
-Meeshifinance.in