SWP (Systematic Withdrawal Plan) Calculator

Total investment
Total withdrawal
Final value

A Surprising Story: The Pension That Never Ended

Mr. Sharma, a retired teacher, invested his entire retirement corpus of 50 Lakhs into a mutual fund. Anxious about his monthly expenses, he planned to withdraw 40,000 every month. He used an SWP calculator and saw that at an expected 8% annual return, his money would last for about 20 years. However, he decided to be a bit more strategic.

He invested in a balanced fund that historically gave around 10% returns. The surprise? The calculator showed that at a 10% return rate, his withdrawals were less than his earnings. His corpus not only provided him with a monthly income but also continued to grow! Years later, his initial 50 Lakhs had grown to over 60 Lakhs, even after withdrawing regularly. The calculator didn't just plan his withdrawals; it showed him a path to create a pension that could potentially last forever and even leave a legacy for his children.

How can a SWP calculator assist you?

A Systematic Withdrawal Plan (SWP) calculator is an invaluable tool for individuals planning for a regular income stream from their investments, especially during retirement. It assists by projecting how long a corpus will last based on the withdrawal amount. By using the calculator, you can find a sustainable withdrawal rate that ensures your money lasts for your desired period, or even grows over time if the returns are higher than the withdrawals.

How to use SWP calculator?

Using this SWP calculator is straightforward. Simply adjust the sliders for the following inputs:

  • Total Investment: The initial lumpsum amount you are investing.
  • Withdrawal per month: The fixed amount you wish to withdraw every month.
  • Expected return rate (p.a): Your estimated annual return on the investment.
  • Time period: The number of years you plan to withdraw the money.

The calculator will instantly show you the total amount you will withdraw and the final value of your investment at the end of the tenure.

FAQs

What is a Systematic Withdrawal Plan (SWP)?

An SWP is a facility that allows an investor to withdraw a fixed amount of money from their mutual fund investment at regular intervals (e.g., monthly, quarterly). It provides a regular income stream while the rest of the corpus remains invested and continues to earn returns.

Is the income from SWP tax-free?

No, the income is not entirely tax-free. Each withdrawal from an equity fund is treated as a redemption, and capital gains tax (short-term or long-term) is applicable on the profit component of the withdrawal, based on the holding period.

What happens if my final value is negative?

A negative final value in the calculator's projection means that your withdrawal rate is too high compared to the investment returns, and your initial corpus will run out before the end of your chosen time period. You should consider reducing your monthly withdrawal or seeking a higher-return investment.

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