SWP Calculator

SWP Calculator Overview

Systematic Withdrawal Plan or SWP is a withdrawal scheme that allows investors to earn regular income from their mutual fund investments. If you have invested in a mutual fund scheme, you can instruct the fund house to redeem mutual fund units to provide you either a fixed or variable amount of money periodically such as every month, quarter, or year. You can withdraw a fixed amount or the incurred capital gains during the period by customizing the cash flow with the fund house accordingly. 

Suggested: Track All Mutual Funds

Calculating returns and the remaining principal amount of SWP can be cumbersome, time-consuming, and prone to errors if the math is done manually, Although there is a formula to calculate SWP returns, it is recommended that you should use an SWP calculator. An SWP calculator is a tool that helps you to calculate the monthly withdrawals from your mutual fund investment and the total value of the investment after withdrawal.

What is SWP?

SWP is the acronym for Systematic Withdrawal Plan which is a method of withdrawing money periodically from your mutual fund investment. You can set a fixed withdrawal amount or instruct the fund house to withdraw the capital gains from your investment. In this way, you can either earn a fixed or variable income from your mutual fund investment. Let us understand this with an example-

Fixed Withdrawal on SWP

Suppose you have invested a certain sum of money and purchased 20,000 units in a mutual fund. You opt for SWP and instruct your fund house to withdraw Rs 10,000 on the 1st of every month, and the first withdrawal date is set on January 1, 2023. Now, let’s suppose that the NAV of the fund is Rs 10. Hence, to withdraw Rs 10,000 every month, the fund house will have to redeem 10000/10 = 1000 units every month. So after the first month withdrawal, you will have 20,000 - 1,000 = 19,000 units left. Now suppose that the mutual fund performs well and its NAV changes to Rs 15 on February 1, 2023. Hence, to withdraw Rs 10,000 this time, you will have to redeem 10000/15 = 666.67 units. After this withdrawal, you will be left with 19,000 - 667 = 18,333 units. This process goes on and you can calculate the remaining units or investment amount. 

Variable Withdrawal on SWP

Variable withdrawal in SWP generally means withdrawing the incurred capital gains periodically. Suppose, you have invested Rs 1 lakh in a mutual fund scheme, whose NAV increased by 2% in the first month. This translates into a gain of Rs 2,000. Hence, the capital gain of Rs 2,000 will be withdrawn from your investment. 

Calculating withdrawal value and remaining invested amount after withdrawal is hectic if done manually. You can use a SWP plan calculator and get all the necessary information within no time. Let us learn about the SWP calculator in detail.

SWP Mutual Fund Calculator

As said, a systematic withdrawal plan calculator or SWP calculator is an online tool that shows you the periodic withdrawals and the remaining principal invested amount after the withdrawal. It requires a few inputs to show you the total investment, total withdrawal, and final value of the investment and the total withdrawal. 

The SWP calculator is an easy-to-use tool which requires you to enter four details in order to give the total investment and withdrawal amount along with the final value of the investment after all withdrawals.

A SWP calculator requires the following inputs:

• Total Investment: It is the total invested amount in the mutual fund scheme
• Withdrawal Amount (per month): Amount you wish to withdraw every month (or quarter, year)
• Expected Return (annualized): The expected rate of annual return from the mutual fund scheme
• Time Period: The time period of SWP, i.e; the number of years for which you will keep withdrawing funds monthly

Based on the given inputs, the SWP calculator will calculate and show you the following:

• Total Investment: Total amount invested in the mutual fund (same as above)
• Total Withdrawal: Total amount that you would have withdrawn during the SWP period
• Final Value: Final value of your investment after subtracting the total withdrawal amount

How Does SWP Calculator Work?

SWP calculator saves you from doing manual calculations in order to calculate total withdrawal, remaining invested amount, and more. It uses the following formula:

A = PMT ((1+r/n)^nt – 1) / (r/n))

Where, 

A = Final value of investment

PMT = Amount withdrawn every period

n = number of compounds in a period

r = expected annual rate of return

t = total number of period for which the money is invested

Let us understand this with an example:

Suppose you have invested Rs 2,40,000 in a mutual fund scheme and opted for an SWP of Rs 10,000 per month for a period of 12 months. Considering the annual rate of return from the mutual fund scheme to be 7%, we get the following balance sheet:

Hence, your final value of investment will be Rs 8,052.1. 

You can also get the final amount by using the INDmoney SWP calculator. 

Benefits of Using INDmoney SWP Calculator

• Using INDmoney SWP calculator, you can gauge your remaining investment amount after each withdrawal, by adjusting both the withdrawal amount and capital gains incurred. 
• You can easily change the total investment amount, withdrawal amount, expected rate of return, and time period of SWP to get different results based on the inputs. This helps you to compare different SWP plans and get the best customization for you.
• The INDmoney SWP calculator shows you the final value of investment after the SWP ends. With this, you can plan your future investment/finances in advance.

Systematic Withdrawal Plan or SWP is one of the best ways to get secure income from your mutual fund investments. You can easily choose the right SWP for a mutual fund using the INDmoney SWP calculator and optimize your returns.