SWP Calculator - Systematic Withdrawal Plan Calculator

(Estimate your systematic withdrawal plan payouts over time.)

Strategically plan your post-investment income stream with a systematic withdrawal plan calculator. An SWP calculator projects how long your capital will last when using a Systematic Withdrawal Plan (SWP), a facility that provides you with regular payouts from your mutual fund investments.

Total Investment(max: ₹1,00,00,000)

₹

₹ 1 Lakh

₹ 1 Crore

Withdrawal per Month(max: ₹1,00,000)

₹

₹ 1000

₹ 1 Lakh

Expected Returns (%)(max: 30%)

30%

Tenure (years)(max: 30)

Years

1 Year

30 Years

Invest

Withdraw

monthly,

Final balance

after a

year tenure

You can invest in Guaranteed Income Plan for regular income along with market-linked instruments to balance risks.

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What is the Systematic Withdrawal Plan Calculator?

An SWP calculator is a strategic financial tool designed to help you map out a regular income stream from your mutual fund investments.

By entering your total investment, monthly withdrawal amount, and an expected rate of return, the calculator projects the future value of your remaining corpus over time. This makes it a valuable tool for retirees and anyone planning to achieve a steady cash flow while their remaining capital remains invested and continues to grow.

How Does the SWP Calculator Work?

To accurately project the sustainability of your funds, an SWP calculator performs a month-by-month simulation rather than using a direct formula.

The formula for calculating the SWP is:

A = PMT × [((1 + r/n)^(nt) – 1) / (r/n)]

Where,

A = Future value
PMT = Payment per period
r = Annual interest rate
n = Compounding periods per year
t = Number of years

Furthermore, here is the step-by-step process the SWP calculator uses to calculate interest each month:

The calculation begins with your total investment amount.
Your fixed monthly withdrawal amount (PMT) is deducted from the balance.
The expected rate of return is then calculated on the remaining corpus for that month.
This adjusted amount becomes the opening balance for the next month.

This cycle repeats for the entire investment tenure, allowing you to see how your regular withdrawals impact your principal and how continued market growth can help your capital last longer.

Example of Systematic Withdrawal Plan

Let us understand how the SWP calculator calculates your finances with a step-by-step example:

Consider the following scenario:

Total Initial Investment: ₹2,00,000
Desired Monthly Withdrawal: ₹10,000
Withdrawal Period (Tenure): 1 Year
Expected Annual Return: 9%

Here is how the calculator processes this information each month:

Month 1: The Initial Withdrawal The process starts with your principal amount. First, interest is earned on the balance, and then
your fixed withdrawal is deducted.

Opening Balance: ₹2,00,000
Interest Earned (for the month): ₹2,00,000 x (9% / 12) = ₹1500
Balance before withdrawal: ₹2,01,500
Amount Withdrawn: - ₹10,000
Closing Balance: ₹1,91,500

Month 2: Compounding on the Remaining Capital
The same calculation is repeated, but now the interest is calculated on the new opening balance.

Opening Balance: ₹1,91,500
Interest Earned (for the month): ₹1,91,500 x (9% / 12) = ₹1436.25
Balance before withdrawal: ₹1,92,936.25
Amount Withdrawn: - ₹10,000
Closing Balance: ₹1,82,936.25

This cycle of earning interest and deducting withdrawals continues for the entire tenure.

Summary of the Year
The following table provides a complete overview of the 12-month period:

Month	Opening Balance (₹)	Interest Earned (₹)	Withdrawal (₹)	Closing Balance (₹)
1	200000.00	1500	10,000	191500
2	191500	1436.25	10,000	182936.25
3	182936.25	1372.02	10,000	174308.2718
4	174308.2718	1307.312	10,000	165615.5839
5	165615.5839	1242.1168	10,000	156857.7007
6	156857.7007	1176.4327	10,000	148034.13335
7	148034.13335	1110.2560	10,000	139144.3895
8	139144.3895	1043.5829	10,000	130187.9724
9	130187.9724	976.4097	10,000	121164.3822
10	121164.3822	908.7328	10,000	112073.1151
11	112073.1151	840.5483	10,000	102913.6634
12	102913.6634	771.8524	10,000	93685.5159

As the summary shows, after withdrawing a total of ₹1,20,000 over the year, your investment still generated ₹771.8524 in interest. This leaves a final corpus of ₹93685.5159 remaining, clearly demonstrating how an SWP facilitates regular payouts while allowing your capital to continue working for you.

How to Use the SWP Calculator?

Using a SWP calculator online is very easy, even if you are an inexperienced person when it comes to investing. Just follow these simple steps, and you will get an idea of how your money will grow and how much you can withdraw over time.

Enter Your Investment Amount: First of all, enter the amount of money that you intend to invest into the mutual fund.

Specify Your Withdrawal Amount and Frequency: Choose the amount of money you would like to withdraw and the frequency (monthly, quarterly, or annually).

Provide the Investment Duration: How long do you want to keep your investments running? Is it a few years or more? Think about it and specify the total number of years or months you plan to keep the SWP active.

Enter the Expected Rate of Return: This is the estimated percentage your mutual fund is expected to generate every year. Enter the anticipated annual return percentage for your mutual fund. You can check past performance to get an idea.

Calculate the Results: Click the “Calculate” button, and the tool will show you how much money you will get, how much will be left, and how your investment will perform over time.

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Benefits of SWP Calculator

Unlike Systematic Investment Plan (SIP), SWP allows you to withdraw funds for particular reasons like children’s education, vacations, or medical expenses. This makes it easier for you financially. The SWP calculator can help you with the following:

Easy Retirement Planning: Depending on your needs, the best SWP calculator lets you know how regularly you can withdraw money from your investment without depleting your resources. It is like crafting a set income stream for your retirement years.

Financial Forecasting: The calculator helps you understand how much money you are going to earn and lose over a span of a few years. You can experiment with how different withdrawal amounts will affect your total corpus and make better decisions about your finances as a result.

Protection Against Inflation: A SWP calculator with inflation is useful because you can use it to figure out how much money you can take out without losing value due to inflation. This means a portion of your regular income can be set to always equal its real worth, thus protecting you from an increase in living expenses.

Customized Withdrawal Strategies: Instead of the conventional life insurance or fixed-income plan, with a SWP calculator, you can choose your withdrawal amount. When you find some months bear more expenses than others or wish to receive a fixed income, you can plan accordingly.

Risk Management: The calculator helps you manage investment risks by showing potential scenarios. You can see how different withdrawal rates might impact your long-term financial health and make wiser choices.

Simple Visualization: Most SWP plan calculators provide easy-to-understand graphs and charts. This makes complex financial planning visual and comprehensible, even for those not well-versed in financial terminology.

Key Factors to Consider When Setting Up an SWP Plan

When setting up a Systematic Withdrawal Plan, it is important to consider several factors to ensure that the plan aligns with your financial objectives and serves as a reliable source of income. Understanding what is systematic withdrawal plan and effectively setting it up can easily balance daily cash flow needs and preservation of capital over the long term. Here are the key factors to consider prior to beginning:

1. Investment Objective and Financial Goals

This main goal of establishing a SWP should be your strategy. The purpose of your retirement, whether you need to fund a certain objective or you just wish to generate additional cash flow, will dictate the corpus you will require and the most appropriate withdrawal rate. With a well-defined purpose, ensure that the structure of the plan suits your financial needs and timeline effectively.

2. Choice of Mutual Funds

Choosing the appropriate mutual fund is the key for the success of your SWP. You should usually avoid aggressive equity funds and invest in lower volatility funds, like hybrid or conservative debt funds. Such funds are more stable and ensure that your principal is not eroded quickly, especially during market downturns.

3. Withdrawal Rate and Frequency

The most important aspect to consider is the withdrawal rate. A high withdrawal rate leads to corpus exhaustion. Financial experts often suggest that the withdrawal rate should be between 4 to 5%.

4. Market Conditions and Inflation

SWP can be seriously affected by market volatility. Withdrawing a fixed amount during a market downturn can erode your capital much faster. Moreover, inflation reduces the purchasing power of your fixed withdrawal amount over time. A SWP plan should take these risks into consideration, either by setting the initial withdrawal rate a little lower or by selecting funds that can potentially give somewhat higher returns over the long term than inflation.

5.Tax Efficiency

It is also necessary to understand the tax implications of your SWP for maximizing your in-hand returns. The withdrawal of mutual funds is considered a redemption and will be taxed under capital gains tax. Proper planning can assist in the maximization of your post-tax income stream.

6. Corpus Size and Longevity

The size of your initial investment corpus is directly linked to the sustainability of your SWP. A larger corpus can either support a higher withdrawal amount or make the plan last for a longer duration. It is crucial to use a SWP calculator to project how long your funds will last based on different withdrawal rates.

7. Flexibility and Liquidity

Your financial conditions may vary with time. Thus, one should make sure that your SWP plan is flexible. The asset management company should allow you to adjust your withdrawal value, alter the frequency, or even suspend the SWP when necessary.

8. Monitoring and Reviewing Your SWP Plan

Periodic monitoring and review should take place for your SWP, preferably once a year. Regular assessment enables you to monitor the performance of the underlying mutual fund and ensures the well-being of your corpus. Depending on market performance and any alterations in your financial circumstances, you should revise your withdrawal rate or rethink your investment approach so as to keep pace with your ambitions.

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FAQs on SWP Calculator

1Is the SWP calculator user-friendly?

2How accurate are the results generated by the SWP calculator?

3Who should consider using the SWP calculator?

4How does a SWP calculator help in determining the returns on my mutual fund investment?

5Withdrawal Options Under an SWP?

6How Can I Invest in a SWP?

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Disclaimers-

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.