SWP (Systematic Withdrawal Plan) Calculator

Total Investment
₹0
Withdrawal per month
₹0
Return rate (p.a)
0%
Time Period (Y)
0Y

All about the SWP Calculator

What Is SWP?

Systematic Withdrawal Plan, or SWP, is a mutual fund investment facility that enables you to withdraw a fixed amount from your mutual fund investments at specified intervals (monthly, quarterly, annually, etc.), you can specify the day of the month/quarter when the withdrawal should be made and the amount will be credited directly to your bank account on the specified day. As long as there are remaining units in your mutual fund scheme account, you may continue your SWP. It is basically a reverse of Systematic Investment Plans (SIPs). In a SIP, you invest fixed amounts in a mutual fund at fixed time intervals. You invest an amount periodically through SIP in a mutual fund in order to accumulate a corpus. Similarly, in SWPs, you withdraw a fixed amount of money from a mutual fund at specified intervals.

What Is Kuvera’s SWP calculator?

Kuvera’s SWP Calculator simulates your monthly withdrawals from your mutual fund investments. It helps you easily determine how long you can continue your SWP based on your initial investment, how much you can withdraw at the selected intervals and the value of your investment at the conclusion of the SWP. In this SWP calculator, just enter the total investment amount in mutual funds, the amount for periodic withdrawal, the expected annual rate of return, and the tenure of investment.

How Does The Kuvera SWP Calculator Work?

The Kuvera SWP calculator is very easy to use. Just enter a few key values and the calculator does the rest automatically to help you simplify your investment decisions.

To use Kuvera SWP calculator, enter the following values:

  1. Investment Amount: The total amount that you wish to invest in mutual funds

  2. Withdrawal amount per month

  3. Expected annual rate of return (%)

  4. Time Period : Tenure, or duration up to which you wish to make withdrawals.

The Kuvera SWP Calculator uses a mathematical formula to calculate how long you can withdraw from your mutual fund plan periodically, which is quite difficult for an individual to calculate otherwise.

Let's discuss the formula,

A = B ((1+r/n)^nt – 1) / (r/n))

In this mathematical formula,

A denotes the potential value of the investment amount in the future.

B denotes the principal balance or the amount to be withdrawn at each interval.

r denotes the expected annual rate of interest on the investment options.

n denotes the no. of times rate of interest will compound on the investment amount.

t denotes the total time intervals.

For example, an investor makes an initial investment of INR 2,40,000 in a mutual fund scheme. He chose an SWP of INR 20,000 per month, and the tenure of his withdrawal from the SWP plan is one year, i.e. 12 months, at an estimated rate of interest of 7% per annum. Using the above-mentioned formula for deriving the compound interest, the estimated balance at the end of the entire mutual fund scheme shall be INR 9,194, which signifies a profit on the initial investment.

This formula for calculating the final value of your mutual fund is quite tricky and confusing. However, using the Kuvera SWP calculator will make the computation considerably more straightforward and easy.

Benefits Of Kuvera’s SWP Mutual Fund Calculator

Kuvera SWP Calculator is one of the best SWP calculators available online, there are numerous benefits of using Kuvera’s SWP calculator. With this, it is possible:

  • To determine the monthly income from mutual fund investments made through the Systematic Withdrawal Plan.

  • To calculate the amount at maturity and withdrawal amounts.

  • To compute the mutual fund scheme's ideal monthly withdrawals.

  • You can easily modify the total investment amount, the withdrawal amount, the estimated rate of return, and the time period to obtain different results. This allows you to compare several SWP plans and obtain the optimal level of customization.

The calculator for the systematic withdrawal plan demonstrates how you may create fixed cash flows through the SWP until you reach a sufficient unit balance in your account. Some of the other key features of Kuvera’s calculator are:

  • It instantaneously shows you the result.

  • It is absolutely free of cost and easily accessible to everyone.

  • It helps you to choose the most viable investment strategy to maximize your financial gains.

  • The SWP calculator displays the final value of investment once the SWP period has ended. This allows you to plan ahead for your future investments and finances.

  • It is a very user-friendly, easy-to-use, and a handy tool that you can use anywhere - on any PC, laptop, or mobile phone. Investors are just required to enter the variables and the calculator does the rest.

Who Should Invest In A SWP scheme?

An SWP is one of the best investment strategies for retirees, those on sabbatical, professionals with irregular incomes, or business persons. Kuvera would let you compare various SWP mutual fund schemes, and Kuvera's SWP would aid you to choose the best suited to achieve your financial goals.

SWP is not only for retirees, but also for individuals with many dependents. The SWP option is also available to employees with familial obligations who require supplementary income. Individuals may select an SWP option for a variety of other reasons as well, such as their children's educational and travel demands and their impending financial aspirations.

What Is SWP In Mutual Fund?

In the case of SWP in mutual funds, you invest a corpus or lump sum initially and then withdraw that amount at a predetermined frequency to generate a regular stream of income. However, the amount to be withdrawn from the mutual fund and the time intervals are fixed as per the discretion of the investor. This chosen frequency of withdrawal in SWPs can either be monthly, quarterly, half-yearly, or annually.

Bank fixed or postal deposits are generally the first options for investors who want a consistent cash flow from their assets. However, investors are now concerned about their future needs for income because of the lowering interest rates on these investment options. SWP, a mutual fund product, offers a remedy for this. So how does SWP work in mutual funds? A systematic withdrawal plan (SWP) is a mutual fund investing strategy that enables investors to take fixed income from their mutual fund investments at predetermined intervals, such as monthly, quarterly, or annually. The positive aspect is that returns are tax-efficient and there is no TDS on gains, unlike typical investment options.

The SWP plan creates cash flows (revenue) by redeeming units from the scheme at a predetermined frequency. The amount of SWP and the scheme net asset value (NAV) on the withdrawal date determine the number of units that must be redeemed to produce this cash flow.

In volatile markets, SWP is the preferred choice. Investors can make a partial withdrawal while continuing to invest in mutual funds. As a result, investors get a predictable, steady return on their investments. Investors can use the SWP option to supplement their primary income with a second income to meet their financial commitments. When an investor is on the verge of attaining a goal and needs money, SWPs can be useful. Since fluctuating markets impact the NAV of the mutual fund scheme, SWP makes sure that the objective may be reached without a cash crunch. The investors may retain or reinvest the withdrawn funds according to their financial objective. To determine the amount needed to achieve their financial goals, one might use the SWP calculator.

SWP in mutual funds can usually be done through two modes:

  1. Fixed Amount SWP:

For example, you have invested a principal amount of INR 10 lakh in a mutual fund, and you wish to generate a regular income out of it. Through a fixed amount SWP, you choose to withdraw a fixed amount of INR 10,000 every month. Through a fixed amount SWP, irrespective of the market performance of your underlying fund, you would receive a fixed amount of INR 10,000 in your bank account every month.

If your withdrawal is 12% of the underlying fund per annum, i.e. 1.2 lakh, and your underlying fund gives you a better return than 12%, then your initial investment amount of INR 10 lakh will stay intact along with the additional profits which you are not withdrawing.

But if your underlying fund gives you returns less than 12%, you will be withdrawing from your initial investment amount. This may guide you to consider other better investment options.

  1. Capital Appreciation

Let us assume that you have invested a principal amount of INR 10 lakh in an equity-oriented hybrid fund. Through the capital appreciation SWP, you will withdraw only the profits from the underlying fund at the end of each month and keep the original investment amount intact. For example, in the first month, if the profit in your investment amount was INR 9,000, you will withdraw this amount keeping the principal amount intact. In the second month, the profit in your investment was INR 7,000; you will withdraw this amount and keep the principal amount intact. This is a good strategy for investors who need regular income on a monthly basis.

Conclusion

Systematic Withdrawal Plan, or SWP, is one of the finest methods for securing a steady income from mutual fund assets without any need for liquidation of the entire investment amount. Using the Kuvera SWP calculator, you may choose the appropriate SWP for a mutual fund and optimize your returns.

FAQs

When should you use SWP?
Is it simple to use the Kuvera SWP Calculator?
What tax savings methods does an SWP offer?
What does the SWP Calculator do?
Is a current SIP required for SWP?
Who is qualified for the SWP?
Why is SWP considered as a good option?
Profit from SWP vs dividend, which is better?