Systematic Withdrawal Plan (SWP) Calculator

Systematic Withdrawal Plan (SWP) Calculator

If you are a regular investor in mutual funds, you must be familiar with terms like mutual fund SWP calculator and systematic withdrawal plan calculator India. The mutual fund SWP calculator helps you to work out a model how you can profitably draw down your corpus in a systematic manner. Let us take a detailed look at the systematic withdrawal plan calculator India.

What is Systematic Withdrawal Plan?

Before we get into the nuances of the systematic withdrawal plan calculator or SWP calculator, let us start by looking at what this concept of systematic withdrawal plan or an SWP is all about. This is a structured drawdown plan offered by mutual Funds, where you withdraw a fixed amount periodically from the scheme. When you draw a fixed small amount from the corpus, it is better than withdrawing a lump sum at one go as the remaining funds in the mutual fund continue to earn returns.

Normally, if you are retired and plan to live out of your accumulated corpus, then SWP helps to fulfil your monthly cash flow needs. It is most suitable during retirement when you actually need funds for your sustenance. You can look at the SWP as the reverse of a SIP. In an SIP you invest in a phased manner while in an SWP you withdraw in a phased manner. That way, you can draw down your entire corpus over 20-25 years post retirement and not worry about just taking out the returns. Also, the SWP is more tax efficient as the tax is only imposed on returns and SWP has a large principal component too.

How do SWP Calculators work?

According to the Systematic Withdrawal Plan (SWP), an individual must invest a specific amount and withdraw a predetermined portion of the invested corpus monthly. After each withdrawal, the withdrawn amount is subtracted from the initial investment, while the remaining balance accrues interest.

Determining the monthly withdrawal amounts and the total maturity value can be challenging. However, to simplify this intricate calculation, the SWP calculator is a specialized tool that efficiently computes your final maturity amount following your specified monthly withdrawal plan, streamlining the mutual fund investmentprocess.

The SWP Return Calculator exhibits the consistent cash outflows facilitated by the systematic withdrawal plan, enabling the application of the required mathematical formula.

A = PMT ((1+r/n)^nt – 1) / (r/n))

PMT = Payment amount for each period,

A = Future Value of the Investment,

n = number of compounds in a period,

t = number of periods the money is invested.

Example

As previously explained, the Systematic Withdrawal Plan (SWP) allows investors to generate monthly income and a final lump sum at the end of the maturity period. To gain a comprehensive understanding of this investment and withdrawal schedule, consider the following example:

In this scenario, an individual has made an initial investment of Rs. 50,000 for a duration of 1 year while concurrently initiating a systematic monthly withdrawal of Rs. 1,000. The interest rate applied to this investment is 10%.

In this scenario, an individual has made an initial investment of Rs. 50,000 for a duration of 1 year while concurrently initiating a systematic monthly withdrawal of Rs. 1,000. The interest rate applied to this investment is 10%.

As a result of this investment and withdrawal strategy, the total return on investments after the tenure amounts to Rs. 4,565.

How to use the IIFL’s SWP Calculator?

IIFL’s SWP Calculator is a valuable tool for computing the systematic withdrawal plan for mutual fund investments over a specified period. To utilize the SWP Calculator effectively, follow these steps:

• Input the total amount you have invested in mutual funds.
• Specify the monthly withdrawal amount from your chosen mutual fund scheme.
• Enter the expected rate of return for your investment.
• Indicate the duration of your investment in years.

Upon completing these inputs, the SWP Calculator will provide you with essential information, including the total investment amount, total withdrawals, accumulated interest, and the ultimate value of your investment.

Advantages of IIFL’s SWP Calculator

• Utilize the IIFL SWP Calculator to compute your monthly earnings from mutual fund investments using the Systematic Withdrawal Plan.
• Experiment with various withdrawal amounts using the IIFL SWP Calculator to estimate the maturity sum.
• This calculator assists you in pinpointing the optimal monthly withdrawal figures for your mutual fund scheme.
• With the help of the IIFL SWP Calculator online, you can assess the surplus generated by your SWP, which can be redirected into other financial instruments.

How can a SWP calculator benefit you?

Retirees and elderly individuals frequently find themselves among the primary participants in this investment scheme. Naturally, they often seek a consistent monthly financial inflow to meet their needs. An SWP can serve this purpose, supplementing their pension or serving as a viable alternative. These individuals can use the straightforward and user-friendly systematic withdrawal plan calculator, which offers numerous benefits.

• A Systematic Withdrawal Plan guarantees regular monthly returns while generating a return on investment (ROI) on the total sum invested. This calculator simplifies the accurate calculation of both aspects.
• Configuring the desired monthly withdrawal amount and calculating the maturity amount is straightforward.
• This online tool is readily accessible via the internet.
• Operating this SWP return calculator requires no specialized expertise. Users only need to input the relevant variables in the designated fields, and the output is swiftly generated.

Benefits of SWP Calculator

• Monthly Earnings: Utilize the Systematic Withdrawal Plan Calculator to determine the monthly income generated from your mutual fund investment through the Systematic Withdrawal Plan.
• Final Value: With the SWP Calculator, you can ascertain the maturity amount for various monthly withdrawal scenarios.
• Projection: This calculator aids in projecting the most suitable monthly withdrawal amounts from your mutual fund investments.
• SWP surplus: The SWP Calculator helps you determine the SWP surplus that can be used in other financial instruments.