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SWP Calculator

Systematic Withdrawal Plan (SWP): Overview

SWP is an acronym for Systematic Withdrawal Plan. A mutual fund investment plan allows investors to cash out a predetermined amount from their investments at periodic intervals. Investors can utilise a Systematic Withdrawal Plan to generate a regular cash flow from their investment. It is beneficial for education purposes, repayment of EMIs, and retirements. 

Systematic Withdrawal Plan Calculator

Calculators are simplifying the way of investments. SWP calculator is a user-friendly online tool that determines individuals' monthly withdrawals from their mutual fund investments. It shows the total amount of mutual fund investment after the withdrawal. The SWP calculator helps you to devise a model for how you can profitably draw from your funds. By entering total investment, monthly withdrawal, the estimated rate of return, and the tenure of investment, you can access the estimated figures in the comfort of your home. 

Benefits of Using SWP Calculator

The most common users of SWP are retired individuals and senior citizens. SWP provides them with a fixed monthly payout in addition to or as an alternative to their pension. Calculating SWP manually is a complicated task. The online calculator makes it easy by providing accurate results within seconds. The benefits of the SWP calculator are as follows:-

  • It shows monthly instalments while also providing details on the total interest generated. 
  • You have the liberty to manipulate the withdrawal per month value to assess the best withdrawal sum that suits your financial needs. 
  • The calculator helps you determine the SWP surplus, which you may invest in other financial instruments.

How to Use an SWP Calculator?

The SWP calculator is an easy-to-use online tool that helps individuals determine the systematic withdrawal plan for their investments over a specified tenure. To use the SWP calculator, follow the steps given below:-

  • Specify the total amount that you have invested
  • Enter the desired withdrawal amount from your investment
  • Mention your estimated rate of interest
  • Enter the tenure of investment of the mutual fund
  • Once the data is entered, you can see the total investment, withdrawal amount, interest earned, and the value of your investment

Alternatively, you can calculate the SWP manually using the formula given below:-

A = PMT ((1+r/n)^nt – 1) / (r/n)) Here: 
  • A: It is the value of the investment. 
  • PMT: Payment per period
  • R: the annual rate of return
  • N: Compound numbers in a given period are denoted by "n."
  • T: Tenure of the investment

Why Should You Opt For A Systematic Withdrawal Fund?

Financial institutions offer fixed deposit products through which you can invest a lump sum at a predetermined interest rate and grow it over time. 

The systematic withdrawal plan is an investment in mutual funds that allow investors to withdraw fixed amounts at regular intervals.

Mutual fund units are redeemed monthly, allowing you to receive regular income from your investment. Capital appreciation is included in the redemption amount. Tax liability is only incurred on capital gains. In the case of a fixed deposit, the entire interest income is taxed. 

For regular income, SWPs from debt funds are usually preferred. In the case of debt funds, capital gains are taxed as per the slab rate if you redeem units before three years. Long-term capital gains are subject to indexation at 20%.  

If you opt for SWP from equity funds and redeem the units within one year of investment, it will be treated as short-term gain and taxable at 15%. Whereas, if you withdraw funds after 12 months of investment, it will be treated as a long-term investment, and it is tax-free up to INR 1 lakh. Long-term capital gains above INR 1 lakh are taxed at 10%.

Systematic Withdrawal Plan with Example

SWP Calculator generates monthly revenues and accumulated sum on the maturity date. To understand the concept in-depth, here is an example below: 

For example, an individual invested INR 50,000 for a tenure of 1 year and an SWP of INR 1,000 per month. The rate of interest is 10%. In this scenario, the return on investment on the date of maturity will be INR 4,565.

Month  Balance at begin Withdrawal Interest Earned 
1 50,000 1,000 408
2 49,408 1,000 403
3 48,812 1,000 398
4 48,210 1,000 393
5 47,604 1,000 388
6 46,992 1,000 383
7 46,375 1,000 378
8 45,753 1,000 373
9 45,126 1,000 368
10 44,494 1,000 362
11 43,856 1,000 357
12 43,214 1,000 352

Frequently Asked Questions About SWP Calculator (FAQs)

What is the complete form of SWP?

SWP stands for Systematic Withdrawal Plan.

How much should I withdraw in SWP?

In SWP, you can invest a lump sum in a mutual fund, and you can set an amount to withdraw regularly and the frequency of withdrawal.

How do you calculate SWP?

You can calculate SWP by using an online calculator. You can get the figures with a few clicks by entering the specified data. Alternatively, you can calculate the SWP manually using the given formula:-

A = PMT ((1+r/n)^nt – 1) / (r/n))

Is SWP better than FD?

A fixed deposit is a service provided by financial institutions that give investors a higher interest rate than a regular savings account. A systematic withdrawal plan is a mutual fund investment plan through which investors can withdraw and cash out predetermined amounts at regular intervals from their investments in these funds.

Which funds are best for SWP?

Mutual funds are the best for SWP as it caters to the requirement that you can withdraw money from your mutual funds in instalments; this, in turn, also provides a regular flow of income