Systematic Withdrawal Plan (SWP) Calculator

SWP stands for Systematic Withdrawal Plan and it is method by which you can make systematic withdrawals from an existing investment corpus. In this way a SWP operates similar to a reverse SIP. While in the case of a Systematic Investment Plan, you make periodic investments in a scheme of your choice, a SWP allows you to withdraw funds systematically by redeeming your existing scheme units so that you can create a steady stream of income. Upon redemption, the proceeds are deposited directly to the investor’s bank account automatically.

One key detail that you need to remember is that in the case of a lump sum withdrawal, you make a single transaction. On the other hand, a SWP involves multiple relatively smaller withdrawals made over a specific period of time. To ensure that you maximize your investment benefits you have to carefully consider the amount you would like to withdraw regularly as well as the frequency at which you should withdraw funds.

Let’s understand this better with an example. Suppose you have a corpus of Rs. 1 lakh that you want to withdraw via SWP. In case you want to get an income of Rs 10,000 per month, the SWP tenure will be 10 months. Similarly, if you want a monthly income of Rs 20,000, your SWP will end in 5 months. This is why you need to consider both the monthly amount you want to withdraw and the tenure of your investment in the case of a SWP.

A Systematic Withdrawal Plan Calculator is a tool that can help you calculate the monthly withdrawals that you can make from your existing mutual fund investments based on specific user inputs. With the help of a SWP calculator, you can estimate how much you will be able to withdraw at the end of the SWP tenure. This is especially convenient to understand the impact of generating a regular income from your systematic withdrawal on your existing investments.

The online SWP Calculator online requires the user to provide some key data to operate. These details include the current size of the corpus that has been invested, the tenure over which the SWP withdrawal will be made, the systematic withdrawal per month that you plan to make, and the expected annual rate of return on the remainder of your investments. Once you have entered these details, the SWP calculator will show you the future value of your mutual fund investments.

Under the Systematic Withdrawal Plan, you have an existing investment corpus and then you plan to withdraw a pre-decided amount every month over a pre-determined period of time. Once you withdraw the amount, it will be deducted from the investment while the remaining portion of your investments will continue to accumulate returns over time.

This is where the systematic withdrawal plan calculator comes in to assist you because it can be a tedious task to calculate the monthly withdrawal and the total maturity amount of your investment at the end of the SWP tenure accurately.

The systematic withdrawal plan calculator assists you with this complex calculation and computes the required information instantaneously. Since SWP in India are available free of cost, you can check various combinations of withdrawal amount and frequency to find out the suitable SWP amount and tenure as per your need to generate a regular income. This way an online SWP calculator online calculations as well as helps investors figure out the appropriate method of making systematic withdrawal of existing mutual fund investments.

Although the SWP calculator is used to perform complex calculations, it is extremely easy to use and it can easily estimate withdrawal amounts when entering your inputs. When you use this tool, it displays the regular cash flow with a systematic withdrawal plan. The formula for SWP Calculation is as follows:

A = PMT ((1+r/n) ^nt – 1) / (r/n)), where:

● A = future value of the investment

● PMT= amount paid each period

● n Number of compounds in a given period

● t= number of periods

To use the Systematic withdrawal plan calculator, you need to provide the following information:

● Total Corpus: This is the total investment amount that you plan to withdraw via the SWP route.

● Monthly SWP Amount: This is the amount that you plan to withdraw per month from the current corpus amount

● Expected Rate of Return: Here you need to input the returns that you expect from the corpus available after systematic withdrawal is initiated

● SWP Tenure: Here you need to provide the tenure over which the systematic withdrawal will occur

Once you have entered the required details into the fields provided, the SWP calculator online will show the total investment, total withdrawal, total interest earned as well as the final value of the investment.

Below are the key benefits that you can enjoy upon using an SWP calculator so that you can plan your systematic withdrawals better:

● The online SWP calculator is free to use and you can use it with different combination to calculate the maturity amount.

● Systematic withdrawal plan calculator can also be used to identify the suitable monthly withdrawal amount that provides an adequate balance between monthly income and maturity value.

● Since the calculation done through a SWP calculator does not involve any manual calculation and results are available instantaneously, you can save time while receiving error-free estimates regarding your planned SWP.

While the SWP calculator is a powerful tool for planning systematic withdrawals, you should keep in mind that it bases the results on the inputs provided by you. So, the results of this calculator must be considered as estimates as they might not adequately represent real-life ups and downs of markets.