How to use an SWP mutual fund calculator?

SWP Calculator: How To Use And Its Benefits

So, you have taken the step and invested your money into a mutual fund, patiently waiting for the day you get to enjoy the returns of your smart investment. But when that day finally arrives, how do you plan on accessing those funds? Here’s where a systematic withdrawal plan (SWP) comes into play. 

A systematic withdrawal plan (SWP) is an investment strategy in which investors withdraw a fixed or variable amount of money from their mutual fund schemes on a periodic basis. The frequency could be monthly, quarterly, semi-annually, or annually as per their needs. This means that instead of taking one lump sum withdrawal from your investment, you are able to take out smaller amounts over time. It helps to generate regular income while still preserving capital growth potentials and diversification benefits provided by investments in mutual funds that are still invested.

As an example, if you invest Rs. 50,000 with a tenure of one year and opt for an SWP with a monthly withdrawal of Rs. 1,000 and the interest rate is 10%, your first month’s withdrawal would be Rs. 1,000 and the remaining balance would earn interest. 

By that same logic, for later months, the withdrawal amount would remain Rs. 1,000 and interest would be accrued on the remaining balance from earlier withdrawals. Thus, SWPs can provide both security and growth for your investments and are worth considering for long-term financial planning.

So, how can an SWP calculator assist you with systematic withdrawal plans?

An SWP mutual fund calculator is useful to help you understand the long-term impact of systematic withdrawals from an investment amount. It allows you to adjust key parameters such as the initial principal, withdrawal amount, and withdrawal frequency to accurately estimate the total withdrawal amount with detailed information about the remaining principal invested. 

By using it, you can get a comprehensive picture of the expected wealth growth over time, which will enable you to plan for the future with more certainty.

How to use the SWP mutual fund calculator online?

1. Enter the total mutual funds investment amount you have invested.  

2. Next, enter the amount of money you would like to withdraw from your mutual fund scheme monthly. This amount should be within reasonable limits so that it doesn’t deplete your corpus too quickly or create other difficulties.  

3. Enter your expected rate of return. Depending on where and how you invest, this rate could vary significantly.

4. Tenure of the investment in years. This number should factor in both your risk tolerance and goals.  

Once all the fields have been filled in correctly, click “Calculate”. Wait for the result indicating your final investment amount after making fixed withdrawals regularly. The results can be presented in a table format with a graphical representation.  

For example, let’s assume you have invested Rs 10,00,000 in a mutual fund scheme with an expected rate of return of 8%. You want to withdraw Rs 17,000 per month for 5 years. After entering these details, the systematic withdrawal plan calculator will tell you that at the end of 5 years, the value of your investment would be approximately Rs. 2.2 lakhs after all withdrawals have been made.   

You can also enter different inputs, such as varying withdrawal amounts or return rates, to see how these changes affect your final corpus value at maturity.  

In a nutshell

An SWP in mutual funds helps provide regular income to investors and using an SWP calculator further facilitates the process of financial planning. As such, it is imperative to make the most of such a calculator to ensure your invested money is utilised effectively while generating the income and returns you require to fulfil your financial aspirations. 

Leave a Reply