Best SWP Plans (2026): How To Create A Regular Income From Mutual Funds
Building a wealth corpus is not the only goal of successful financial planning; generating sustainable income is also crucial. Despite substantial wealth, the absence of a periodic income flow can impose liquidity constraints on investors.
Therefore, in a well-structured withdrawal plan, while accumulating wealth can be the first step to investing, the second, equally critical half is its strategic conversion into sustainable income without complete depletion of savings.
The Systematic Withdrawal Plan is a kind of mutual fund income plan. A lump sum investment is made into a mutual fund scheme under the SWP plan, and the investor regularly withdraws a set or variable amount while the remaining corpus remains invested and increases in value.
This blog lists the best SWP plans to help investors plan their investments efficiently and balance wealth accumulation with sustainable income generation.
Best SWP Plans For 2026
Similar to SIP, SWP is a mutual fund investing method. Therefore, choosing the best SWP plan depends a lot on choosing the right mutual fund. Almost all mutual fund schemes allow SWP investing except for close-ended schemes, certain specialised funds, etc.
Here are a few of the best mutual fund schemes in some popular mutual fund categories, selected based on their Net Assets, as of 3 June 2026.
These mutual funds invest 80% of their total assets into large-cap stocks and related assets. The table lists the best mutual funds in the category.1
| Fund | Net Assets (INR Cr) | 3-Year Return (%) | 5-Year Return (%) | Sharpe Ratio (%) | Standard Deviation (%) | Sortino Ratio (%) |
| ICICI Pru Large Cap Dir | 75,650 | 14.02 | 13.40 | 0.64 | 13.51 | 0.83 |
| SBI Large Cap Dir | 53,468 | 11.15 | 11.32 | 0.44 | 13.78 | 0.56 |
| Nippon India Large Cap Dir | 51,690 | 14.41 | 15.50 | 0.65 | 14.16 | 0.83 |
Source: Value research online,2
2. Liquid Mutual Funds
It is an open-ended debt fund scheme that invests only in money market and debt instruments that have a maturity of up to 91 days. Listed here are the best liquid mutual fund schemes.3
| Fund | Net Assets (INR Cr) | 3-Year Return (%) | 5-Year Return (%) | Sharpe Ratio (%) | Standard Deviation (%) | Sortino Ratio (%) |
| SBI Liquid Dir | 74,571 | 6.91 | 6.11 | 4.65 | 0.20 | 8.98 |
| HDFC Liquid Dir | 72,873 | 6.93 | 6.12 | 4.29 | 0.20 | 8.11 |
| Aditya Birla Sun Life Liquid Dir | 56,604 | 7.01 | 6.20 | 4.65 | 0.20 | 8.98 |
3. Multi-Asset Allocation
An open-ended hybrid mutual fund scheme that allocates at least 10% of its total assets to each of the three asset groups. Discussed here are the top multi-asset allocation funds.4
| Fund | Net Assets (INR Cr) | 3-Year Return (%) | 5-Year Return (%) | Sharpe Ratio (%) | Standard Deviation (%) | Sortino Ratio (%) |
| ICICI Pru Multi Asset Dir | 83,547 | 17.33 | 17.82 | 1.47 | 9.61 | 1.78 |
| SBI Multi Asset Allocation Dir | 17,666 | 17.81 | 14.29 | 1.35 | 8.42 | 1.64 |
| Nippon India Multi Asset Allocation Dir | 14,738 | 20.91 | 16.85 | 1.47 | 9.61 | 1.78 |
The first step to choosing the best systematic withdrawal plan is to understand the category in which an investor wants to invest.
From the category, the investor can then shortlist funds based on return, risk, or other metrics. However, the choice of a category for SWP must be based on certain parameters to ensure efficiency.
Choosing The Best SWP Plan
An SWP can serve as an optimal monthly income plan, provided that the choice of mutual fund and the SWP strategy is based on certain key parameters.
1. Based on age: The age of the investor determines their risk appetite and the time horizon of investment. It also plays a key role in determining the amount of periodic withdrawal required to sustain. The table below shows how the SWP strategy can change based on age.
| Age category | Withdrawal rate rationale | Withdrawal rate |
| Pre-retirement (eg, 50 to 55 years) | Before retirement, the dependency on withdrawal is low. | Low |
| Early retirement (eg, 55 to 65 years) | Right after retirement, the income from the occupation ceases. Therefore, the need for withdrawal increases. However, age-related expenses, like medical bills, might be low. | Medium |
| Late retirement (eg, 65+ years) | The dependence on withdrawal increases as age-related concerns rise. | High |
2. Risk appetite: The capability of the investor to tolerate risk determines the kind of mutual fund category suitable for them. For instance, if an investor is comfortable with market risk, they can choose equity funds, but an investor who is conservative might prefer debt funds.
3. Retirement corpus: The size of the lump sum corpus determines the amount of withdrawal investors can make without depleting the corpus. For instance, if an investor invests INR 25 lakhs in a mutual fund scheme through SWP, assuming a 12% return, the investor can withdraw INR 25,000 per month for 30 years. The final corpus value would stand at INR 25 lakhs.
The table below shows the maximum withdrawal amount investors can have at different principal amounts if the tenure is 30 years and the return is assumed at 12%.
However, for optimal passive income investing and retirement planning in India, investors also need to avoid certain common mistakes made during SIP investing.
Also read on Best SWP For Monthly Income
Common SWP Mistakes
Discussed below are some common mistakes that might occur when making SWP investments.
1. Excessive withdrawals: If an investor sets withdrawal rates too high, the corpus depletes faster. The rate of withdrawal should ideally be less than the rate of return. SWP calculators online can help investors plan their withdrawals before investing.
2. Wrong fund selection: SWP is a mutual fund investing method. Therefore, choosing the right mutual fund scheme that suits an investor's goals and risk appetite is crucial for efficient investing.
3. Ignoring taxes: The rate of tax levied on an asset diminishes the amount of return that an investor can anticipate. For instance, if an asset gives a return of INR 1,000 and the tax payable is INR 100, the actual return an investor can earn is INR 900.
Let us now understand how taxes work in the case of SWP.
Taxation Of SWPs
The SWP taxation is levied based on the nature of the mutual fund and the tenure of holding. Furthermore, only the capital gains, that is, the profit component of each withdrawal, is taxed, not the principal investment.
| Mutual fund category | Long-Term Capital Gain | Short-Term Capital Gain | ||
| Tenure | Rate | Tenure | Rate | |
| Equity mutual fund | Sold on or before 2 years | 12.5% above 1.25 lakhs | Sold on or before 1 year | 20% plus cess |
| Debt mutual fund | Sold after 2 years | Slab rate | Sold after 1 year | Slab rate |
Source: Economic times,5
In the case of debt mutual funds, if the units are purchased till 31 March 2023 and sold on or after 23 July 2024, the STCG rate is the slab rate, while the LTCG rate is 12.5%, without taxation. However, if it is purchased on or after 1 April 2023, then both the STCG and the LTCG are the applicable slab rate.
Grip houses a range of assets, including bonds, corporate FDs, etc., that can offer up to 12.5% YTM. Visit Grip today.
FAQs On Best SWP Plans
 |
Author: Grip Invest Editorial Team The Grip Invest Editorial Team is a group of Chartered Accountants, MBA (Finance) graduates, and Qualified Research Analysts dedicated to helping you invest smarter. We dive deep into India's fixed income landscape to deliver content that is accurate, up-to-date, and easy to understand. Whether you're exploring bonds, fixed deposits, or other fixed income opportunities, our guides cut through the noise and give you the clarity to make better financial decisions. |
Want to stay at the top of your finances?
Join the community of 4 lakh+ investors and learn more about Grip Invest, the latest financial knick-knacks, and shenanigans in the world of investing.
Happy Investing!
Disclaimer - Investments in debt securities/municipal debt securities/securitised debt instruments are subject to risks including delay and/ or default in payment. Read all the offer related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading.
This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip does not guarantee or assure any return on investments and accepts no liability for consequences of any actions taken based on the information provided. For more details, please visit www.gripinvest.in
Registered Address - 106, II F, New Asiatic Building, H Block, Connaught Place, New Delhi 110001
