SWP Calculator: How To Use SWP Mutual Fund Calculator
SWP or Systematic Withdrawal Plan is an investment plan with monthly, quarterly, half-yearly or annual withdrawal features. This fixed withdrawal amount gets deducted from the total investment amount while the investor continues to accumulate interest. To calculate the monthly withdrawals and total matured sum, an SWP calculator can compute and display accurate results easily.
Keep reading to know how to use an SWP calculator, how it works and its benefits, and when is the best time to invest in SWPs.
What is SWP?
A Systematic Withdrawal Plan is a scheduled investment withdrawal plan that allows investors to withdraw from their mutual fund schemes in a phased manner. Typically, you can determine an SWP that includes interval payouts annually, semi-annually, quarterly, or monthly.
With this investment mode, you can customise your cash flow into an investment as and when necessary. Further, you can withdraw either a fixed amount or just the capital gains from your investment. In this way, you can ensure your money stays invested in the scheme, and you can access your returns and income regularly. In addition, you can reinvest the withdrawal amount in some fund or retain it in the form of cash.
How Does a Mutual Fund SWP Calculator Work?
A Systematic Withdrawal Plan calculator gives clarity on the regular cash flows in your investment. It works on the following formula:
A = PMT {(1+r/n)^nt – 1) / (r/n)}
Where,
- A is the future value of an investment.
- PMT denotes the payment amount for each period.
- n is the number of compounds in a period.
- t is the number of periods for which your money is invested.
To understand this better, let’s consider this example.
For instance, you have an initial investment of Rs.1,50,000 as of 1 October 2020 in a particular mutual fund scheme. Suppose you wish to withdraw Rs.10,000 per month as an SWP amount, starting from 1 October 2021, which is exactly one year later. Considering the expected annual return rate is 6%, the final value of the investment post-withdrawal will be Rs. 35,735.
Manual calculation of this value can be tedious. Therefore, an online financial tool such as an SWP mutual fund calculator can make this complex computation comparatively easier.
Calculate Your SWP Mutual Funds Returns
Monthly Investment
Expected return rate (p.a)
%
Time Period (Years)
Invested Amount
0
Est. Returns
Total Value
Benefits of an SWP Calculator
Here are the benefits of using an SWP calculator:
- The calculator helps you compute the monthly income from mutual fund investments through the Systematic Withdrawal Plan.
- SWP can be applied for various withdrawal amounts for computing the maturity amount.
- You can figure out the top monthly withdrawals from mutual funds by using this calculator.
- The SWP surplus is accessible through this calculator that can be invested in other monetary instruments.
How to Use an SWP Mutual Fund Calculator?
There are many online platforms where you can calculate SWP easily. Follow the steps below to use the SWP calculator:
- Visit an online SWP calculator webpage.
- Enter the total investment amount.
- Enter the withdrawal amount.
- Enter the expected return rate (p.a.)
- Enter the tenure.
The SWP calculator will display the total withdrawal amount and the final value of your investment.
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Benefits of Investing in SWP
Tax benefits
For an SWP, there is no Tax Deducted at Source. However, based on the type of scheme and withdrawal amount, capital gains tax will be applicable. Here is an overview of taxation on different types of mutual funds:
| Type | Short-term capital gains tax | Long-term capital gains tax |
| Debt funds | As per the tax slab | 20% after indexation |
| Equity funds | 15% | 10% without indexation |
Rupee cost averaging
When you purchase or redeem units in instalments, you can get the benefit of rupee cost averaging. In an SWP investment, some units held by you are redeemed regularly. During the times when markets are high, lesser units will be redeemed as compared to the times when markets are low. This averages out your returns in the long run and secures you against financial losses that may arise if you sell units.
Capital appreciation
If the withdrawal rate of SWP is lower than the fund return, you can obtain capital appreciation in the long run.
Flexibility
In this type of investment mode, you can choose the investment amount, frequency and end date as per your requirement. Moreover, you can stop your investment at any point during its tenure and withdraw amounts over and above the fixed SWP withdrawals.
Regular income
If you want to obtain a regular income from your investment, you might want to consider this investment mode.
Further, invest in Navi Mutual Fund and obtain maximum returns with a lock-in period of just 3 years. Also, you can make this investment through a Systematic Withdrawal Plan and receive regular income. With Navi, you can start a SIP with Rs. 500 or make a lump sum investment. You also have the option to invest in the top 50 companies through Nifty 50. The benefits include – the lowest expense ratio*, easy-to-navigate dashboard, 100% paperless KYC and zero transaction charges*.
*T & C Apply
You may want to calculate the exact SWP returns to continue investing while making regular withdrawals. To that end, an online SWP mutual fund calculator would be very useful.
Example of Systematic Withdrawal Plan
When it comes to an example the following table will show you the Net Asset Value of the scheme over 5 months. The example shows a person who went for an SWP of Rs. 50000.
| Month | NAV | SWP Amount (Rs.) | Units Redeemed | Units Left | Remaining fund value (Rs.) |
| April | 500 | – | – | 1000 | 500000 |
| May | 515 | 50000 | 97 | 903 | 465045 |
| June | 510 | 50000 | 98 | 805 | 410550 |
| July | 525 | 50000 | 95 | 710 | 372750 |
| August | 530 | 50000 | 94 | 616 | 326480 |
| September | 498 | 50000 | 100 | 516 | 256968 |
When Should You Invest in an SWP Scheme?
If an investor has a large amount to invest for immediate withdrawal, he/she can go for SWP soon after the clearance of the investment.
The investors are recommended to begin an SWP after a gap of one year since the investment has been passed. This will help them save capital gains of 15% on the short-term capital.
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Final Word
It is evident that SWP investments can be ideal for you if you are someone who expects regular income and capital appreciation on your investment. While opting for an SWP, you might want to consider using an SWP calculator to estimate your withdrawal amount and other details conveniently. If you are ready to invest, visit Navi Mutual Fund and get started now!
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
FAQs on SWP Calculator
Ans: Yes. An online Systematic Withdrawal Plan calculator displays the capital gain or loss amount, which helps you with tax calculations.
Ans: As SWP investments help in obtaining regular incomes, it may be a desirable option for retired individuals who need funds for daily expenses.
Ans: No, SWP investment is not restricted to retired persons only.
Ans: Yes, you can add investment over your SWP withdrawals.
Ans: No, you can choose your withdrawal amount in an SWP as per your requirement. Further, using an SWP calculator may be convenient for you if you wish to estimate your final investment value post withdrawal.
Ans: The SWP can be applied for various purposes like for children’s education or for foreign tours. The SWP Calculator offers you adequate tax benefit in a financial year on long-term capital gains.
Ans: SWP in mutual funds offer more tax benefits when it comes to debt funds. Comparatively, SWP is more tax effective than the dividend. The dividends are taxed at a rate of 10%.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
