SWP (Systematic Withdrawal Plan) Calculator

Total Investment

₹5,00,000

Total withdrawal

₹6,00,000

Final value

₹5,218

SWP Calculator

The SWP calculator from Investkraft is an accessible and simple financial tool through which investors can calculate how much return they can generate through a Systematic Withdrawal Plan scheme. SWP is a lumpsum investment method that allows investors to withdraw a certain amount of money from their investments at a frequency of their liking. Use our SWP calculator tool today to find out how much you can withdraw from your lumpsum SWP scheme and how much interest you will earn on the remaining lumpsum amount.

How Does SWP Work?

SWP or a Systematic Withdrawal Plan is a flexible investment scheme through which investors can both withdraw a fixed amount from their investment account and earn interest on the remaining amount. The withdrawal date and the withdrawal amount are set by the investors themselves. Withdrawal can be done on a monthly, quarterly or yearly basis. Investors can either withdraw a predetermined amount from their investment or the interest accrued on the principal amount.

Let us now understand how the SWP calculator works through a detailed example. We will also explain the SWP calculator formula so that the process is easily understood by prospective and current investors.

SWP Calculator Formula

A = PMT ((1+r/n)^nt-1)/(r/n)

Where:

'A' is the final value of your investment.

'n' is the number of periods over which the compounding will happen.

'PMT' is the payment amount for each period.

't' is the tenure of your investment.

Let's say you're considering investing in a retirement account where you make monthly contributions. You want to calculate the final value of your investment after a certain number of years, given a certain interest rate and monthly contribution.

Let's assume the following values:

PMT (payment amount for each period, i.e., monthly contribution) = ₹500

r (annual interest rate) = 6% (expressed as a decimal, so r = 0.06)

n (number of compounding periods per year) = 12 (since it's compounded monthly)

t (tenure of investment) = 20 years

Now, let's plug these values into the formula:

A = PMT * ((1 + r/n)^(nt) - 1) / (r/n)

A = ₹500 * ((1 + 0.06/12)^(12*20) - 1) / (0.06/12)

First, calculate the value inside the parentheses:

1 + 0.06/12 = 1.005

Then, raise this to the power of (12*20):

(1.005)^(240) ≈ 4.6771

Now, plug this back into the main formula:

A = ₹500 * (4.6771 - 1) / (0.06/12)

A = ₹500 * (3.6771) / (0.005)

A ≈ ₹36855.88

So, the final value of your investment after 20 years, with a monthly contribution of ₹500 and an annual interest rate of 6%, would be approximately ₹36,855.88.

How to Use the SWP Calculator to Gauge the Final Investment Value?

By following these simple steps, you can gauge the final investment value of your SWP along with the accrued interest on the remaining principal amount after withdrawal:

Enter an amount of your liking in the total investment section
Select any possible interest rate on your remaining balance
Enter the time for which you want to stay invested
Click on the tab that reads “Invest Now”

What are the Benefits of SWP?

There are several benefits of investing in financial instruments like mutual funds through a Systematic Withdrawal Plan:

Regular Income Source An SWP provides a fixed amount of money at regular intervals, creating a reliable income stream for expenses.
Flexible Withdrawal Plan: You can choose the frequency and amount of withdrawal to match your needs. For instance, you have the option to set up an SWP for monthly, quarterly, or yearly withdrawals.
Tax Saving Option: Investors do not need to pay any tax deducted at source (TDS) on funds received through SWP.
Safety from Market Risk: Withdrawing a fixed amount of money at regular intervals can help you avoid the risks of timing your exit.
Rupee Cost averaging: STP can help manage the purchase price of investments. Invest when prices are low & sell when value increases to increase capital gains over time.
Higher returns Diversifying your portfolio can lead to higher returns by taking advantage of market fluctuations. For instance, transferring some of your funds from low-risk financial instruments to equities during market upswings can increase your potential gains.

FAQs on SWP

A: A Systematic Investment Plan or SWP refers to a scheme through which investors can generate a regular income from their investments. The income can be either deducted from the principal invested amount or the interest accrued on the principal.

A: The remaining invested amount stays invested and you will keep earning interest on the same till the scheme tenure ends.

A: While using Investkraft’s SWP calculator, you need to add the current inflation rate to the calculation manually to get a more refined output of the total amount you will earn from your SWP after its tenure ends and the balance amount at the end of the SWP tenure

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SWP (Systematic Withdrawal Plan) Calculator

Total Investment

Withdrawal Per Month

Expected Return Rate (p.a)

Time Period