Glossary
/SWP Full Form
The full form of SWP is Systematic Withdrawal Plan.
It works exactly like a SIP, but in reverse; instead of putting money in every month, you withdraw a fixed amount from your mutual fund investments to create a regular cash flow. The fund house sells a specific number of units each month to give you that payout, which is why retired investors heavily use it to generate a monthly pension-like income.
Since you are only selling a small portion of your holdings, the remaining amount remains invested and continues to grow. Before setting up a Systematic Withdrawal Plan, calculate your yearly withdrawal rate to ensure your corpus doesn't run out too early.