Systematic Withdrawal Plan Calculator

Often, people find themselves in need of adequate funds to seamlessly meet their day-to-day expenses. This stands true for those who have already made investments in mutual funds. In such a scenario, a Systematic Withdrawal Plan (SWP) emerges as a viable choice.  

SWP allows investors to structure periodic withdrawals from their mutual fund investments, thereby generating a regular payout to address their routine monetary requirements. In SWP, investors can decide the frequency and amount of withdrawals based on their specific financial needs. Whether it's supplementing retirement income, funding education expenses, or simply managing daily costs, SWPs stand out as an effective tool for individuals seeking a dependable financial flow from their mutual fund investments. By strategically tapping into the returns on their investments while potentially benefiting from market appreciation, individuals can confidently navigate the ebb and flow of their financial requirements with the stability provided by a well-executed SWP. Let’s learn about it in detail.  

What is SWP? 

SWP is an acronym for Systematic Withdrawal Plan. It is a process of withdrawing funds from a mutual fund investment in a systematic way. You can withdraw a fixed or variable amount of funds from your mutual fund investment every month, quarter, or year in an SWP.  

People looking for regular monthly income such as retired individuals usually opt for this. It is also a promising option for investors who want to reduce their risk by slowly withdrawing funds from the investments made. 

The choice regarding the amount and frequency of withdrawal of funds from investments rests with investors.  

What is the SWP Calculator? 

The SWP calculator is an online utility tool that helps you to calculate your monthly withdrawals from the investment.  

The SWP mutual fund calculators can help you to: 

• Calculate the amount of money you can withdraw from your investment without exhausting your corpus too quickly. 
• Get an idea of how long your investment will last if you withdraw a fixed amount of money every month. 

You must note that the SWP plan calculator is an online utility tool. It can only help you get estimates and does not guarantee that you’ll be able to withdraw a certain amount monthly. The actual amount you can withdraw depends on how your investment is performing in the market. 

How Does the SWP Calculator Work?  

A systematic withdrawal plan calculator works on certain mathematical formulas to calculate the amount of funds you can withdraw a part of your investments systematically.  

The SWP calculator uses the following inputs to obtain results: 

• Your investment or principal amount 
• Your monthly withdrawal amount 
• The expected interest rate on your investments 
• The investment period or tenure 

Based on your inputs, the SWP tax calculator will show you the following output. 

• Total investment: The total amount of investment in the mutual fund scheme 
• Total withdrawal: The amount of funds you’d withdraw during the SWP period or tenure 
• Final value: The final amount of investments after deducting your total withdrawals over time. 

Example of Systematic Withdrawal Plan 

To learn about how a systematic withdrawal plan works, let’s have a look at examples. This will also give you an idea of how the SWP Mutual Fund Calculator works.  

Example 1: Let’s assume that your corpus accumulated in a mutual fund scheme is around ₹10 lakh. You need to withdraw ₹25,000 every month from your corpus. So, you set up an SWP of ₹25,000 each month. During this plan, the fund house allows you to withdraw a certain amount of funds at regular intervals. The funds are transferred to your respective bank accounts. 

Now, the fund house will continue to withdraw ₹25,000 each month from your investments every month and transfer them to your bank account. The remaining balance or funds will still earn returns based on the underlying asset’s performance. With each passing year, your corpus will tend to decline due to withdrawals made.  

Example 2: Let’s say you invested around Rs 2,40,000 towards an MF scheme and set up a systematic withdrawal plan. You decided to withdraw around Rs 10,000 each month for 12 months. Let's consider the annual rate of return of the mutual fund scheme is around 7%. Considering your investment amount, investment tenure, annual rate of return, and withdrawals, your final value of investments would be around ₹8,052. 

The formula used to arrive at this figure is discussed in the later section.   
How to Use the SWP Calculator? 

The SWP return calculator has a user-friendly interface and produces results in seconds. Let's see how to use it in detail. 

Input: 

1. Fill in the total amount of your investment in the mutual fund scheme. 
2. Enter the amount you’d be withdrawing each month/quarter/year from the fund. 
3. Now, fill in the expected rate of return on your investments. 
4. Enter the investment tenure in years. 
5. Click on the 'Calculate' button 

Output: 

The SWP calculator India will tell you: 

• The total investment 
• Total withdrawal of funds 
• Total interest earned 
• The final value of your investments 

Benefits of Using the SWP Calculator 

The benefits of using the SWP return calculator are as follows: 

1. Helps you determine the feasibility of your SWP plan: When you enter your withdrawal amount and investment value, an SWP calculator in India shows you how long your investment is going to last. It will also show you the amount of money that will be left at the end of the SWP plan. The data can help you decide if your SWP plan is realistic and achievable. 
2. Helps you avoid making impulsive withdrawals: When the market doesn’t perform as expected, you may be tempted to withdraw all your investments. In such scenarios, the SWP calculator online will help you stay disciplined and stick to your withdrawal plan. 
3. Aids you in optimizing your returns: You can maximize your returns by adjusting the withdrawal amount and frequency of the withdrawal.  
4. Easy to use: You can use the best SWP calculator easily and seamlessly as you don’t need a high level of expertise to use it. Investors of all levels of experience can utilize the calculator without any hassles.  

The Formula for the SWP Calculator 

If you’re wondering how SWP is calculated, here is the formula for it: 

A  = PMT ((1+r/n)^nt – 1) / (r/n)) 

Here,  

A= The final value of investments after all the withdrawals 

PMT= The investment amount withdrawn every period 

R= The expected annual rate of return 

N= The number of compounds in a period 

T = Total period/tenure for which the amount is invested  

If you are wondering how to calculate monthly dividends from SWP or how to calculate tax on SWP, you may use SWP calculators online.  

Final Words 

In a scenario where the need for a consistent income aligns with the desire to optimise mutual fund investments, a Systematic Withdrawal Plan emerges as a symbiotic solution. By merging financial prudence with growth potential, individuals can secure their financial present while safeguarding their future aspirations. Whether embarking on retirement, funding dreams, or simply ensuring a stable economic footing, the tool of SWP underscores the leveraging of mutual fund investments to their fullest potential. 

SWP calculators online have made the task of complex calculations easy for you. They empower you to tailor your Systematic Withdrawal Plan according to your unique circumstances, providing insights into withdrawal frequencies, amounts, and potential investment growth. However, you must remember that the results of SWP calculators in Excel format are not always 100% accurate as market conditions are subject to fluctuations. Consult your financial advisor before making crucial investment decisions. And, note that SWP and SIP calculators are different.