SWP Calculator

A Systematic Withdrawal Plan (SWP) is an investment strategy offered by mutual funds that allow investors to withdraw a predetermined amount of money from their investment regularly. It is the opposite of a Systematic Investment Plan (SIP), where investors regularly invest a fixed amount in a mutual fund.

In order to invest in an SWP, you have to invest a one-time, lump sum amount into the fund. At the end of every month, a fixed amount of money will be transferred to you from the investment. The mutual fund will redeem a certain number of units in order to pay you that monthly amount. Suppose, you invested in 1,000 units of the fund in January 2023 and the fixed monthly withdrawal amount is ₹1,000. Now assume that at the end of January, the NAV of the fund units was ₹100 per unit. Hence, the mutual fund will redeem 10 units and pay you ₹1,000. But suppose at the end of February, the NAV of the fund was ₹200 per unit. Then the mutual fund will have to redeem only 5 units in order to pay you the fixed ₹1,000. At the end of February, you will thus be left with 985 units of the mutual fund.

Now at the end of each month, after the fixed amount is withdrawn, the amount by which the remaining investment had grown will be added to the balance amount. This will continue throughout the investment duration.

An SWP helps you generate both monthly returns as well as an accumulated return at the end of the investment’s duration. For example, suppose that you invested ₹1,00,000 for 12 months in an SWP that gives monthly income or withdrawal of ₹5,000 at 10% annual rate of return.

This means that at the end of each month, ₹5,000 will be removed from the balance at the beginning of the month and an interest of (10/12=0.8333%) per month will be added to the remaining balance. This remaining balance combined with the interest will become the balance at the beginning of the next month.

As we can see from the table, the total return earned from the entire investment = (Balance at the end of the 12th month + total amount withdrawn) - initial investment = ₹47,297 + ₹60,000 - ₹1,00,000 = ₹7,297

1. Adequate corpus: It is crucial to have a sufficient investment corpus to sustain regular withdrawals without depleting the principal too quickly.
2. Portfolio allocation: Careful asset allocation is essential to balance generating income and preserving capital.
3. Investment horizon: Investors should consider their investment time horizon and align it with the withdrawal frequency and amount to maintain a sustainable income stream.
4. Market volatility: Fluctuations in the market can impact the overall returns and sustainability of SWPs. It is essential to assess the investment's risk tolerance and adjust withdrawal amounts accordingly.
5. Professional advice: Seeking advice from a financial advisor can help tailor SWPs to individual financial goals and risk profiles.

A Systematic Withdrawal Plan (SWP) calculator is a financial tool designed to help investors estimate the potential outcomes of implementing a Systematic Withdrawal Plan strategy for their mutual fund investments. It allows individuals to assess the future value of their investments based on various parameters such as the initial investment amount, withdrawal per month, expected annual rate of return, and investment tenure.

By entering these key variables into the SWP calculator, investors can simulate different scenarios and obtain a projection of the total value of their mutual fund investment after the specified withdrawal period. This tool helps individuals determine the feasibility and sustainability of their chosen withdrawal strategy and assists in making informed decisions regarding their investment and income requirements during retirement or other financial goals.

The Angel One SWP calculator takes into account factors such as compounding returns, the impact of regular withdrawals on the investment's principal, and the potential growth of the remaining invested amount. It provides users with a clear understanding of how their investments may fare over time and allows for adjustments to be made based on their financial objectives and risk tolerance.

The output from Angel One’s SWP calculator empowers investors to assess the viability of their withdrawal plans, adjust withdrawal amounts, tenure, or investment allocations if needed, and ensure that their investments can sustain their desired income stream over the long term.

It is important to note that while an online SWP calculator provides valuable insights, actual investment returns may vary due to market fluctuations and other factors. Therefore, it is important to consult with a financial advisor or professional to tailor the SWP strategy to individual financial goals and circumstances.

The SWP calculator formula calculates the future value of mutual fund investments based on the total investment amount, withdrawal per month, expected annual rate of return, and tenure of the investment.

To break it down further, let's define the variables used in the formula:

• Total Investment Amount: This refers to the initial amount of money you invest in the mutual fund
• Withdrawal per Month: This is the amount of money you plan to withdraw from the investment each month.
• Expected Annual Rate of Return: This indicates the rate of return you anticipate earning on your mutual fund investments annually. It is usually expressed as a percentage.
• Tenure of the Investment: This represents the duration or length of time for which you plan to stay invested in the mutual fund.

While the specific formula may vary depending on the exact calculation method used in a particular online SWP calculator, a common approach is to calculate the future value of the mutual fund investments by applying the compound interest formula. Here's a generic representation of the formula:

A = PMT ((1+r/n)^nt – 1) / (r/n)

The calculates the future value of an investment given certain parameters. Here's a breakdown of the variables used in the formula:

A: Future value of the investment
PMT: Payment amount for each period (regular cash flow or withdrawal amount)
r: Expected rate of return per period (usually expressed as a decimal)
n: Number of compounding in a period
t: Number of periods the money is invested or the total duration of the investment

The formula calculates the future value (A) of an investment by taking into account the regular payments (PMT), the expected rate of return (r), the compounding frequency (n), and the investment duration (t).

To use the Angel One SWP calculator, simply visit the Angel One SWP calculator online and take the following steps:

1. Enter the ‘Total Investment’ i.e. the total amount that you have invested initially.
2. Enter the ‘Monthly Withdrawal’ ie. the amount that you will be withdrawing from your investment at the end of every month.
3. The ‘Expected Return’ that you wish to gain annually. Note that the final return you actually receive will be less than this percentage value because you will be withdrawing from the investment amount periodically.
4. Enter the duration of the investment under ‘Select Duration’.

Once you enter these details, on the right, the Angel One SWP calculator will show you the:

1. ‘Invested Amount’ i.e. how much you had originally invested.
2. ‘Total Withdrawal’ i.e. the accumulated value from the monthly withdrawals.
3. ‘Final Value’ i.e. how much value remains within the investment at the end of the investment duration.

1. Accurate planning: A SWP calculator provides you with accurate calculations and projections regarding the future value of your mutual fund investments. It helps you understand the trade-offs between higher withdrawals and longer investment periods or vice versa. This information empowers you to make adjustments to your portfolio and choose a strategy that aligns with your financial objectives.
2. Ease of use: You can easily enter the amount that you want to invest along with other details such as rate of return, withdrawal amount and duration to find out how much returns you will earn from a particular SWP investment. The Angel One SWP calculator will give you instant results.
3. Free to use: The calculator is also available online and completely free, regardless of how many times you use it. You can access it anytime, from anywhere, as long as you have a device with internet connection.

Overall, using an online SWP calculator empowers you to make informed decisions, set realistic goals, and effectively plan your withdrawals from mutual fund investments. It provides a comprehensive analysis of your investment portfolio, helping you optimise your financial strategy and maximise the potential benefits of your investments.