SWP Calculator

How Does an SWP Calculator Work?

An online SWP calculator helps you determine how much you can withdraw monthly from your investment corpus or how long your corpus will sustain a selected withdrawal amount.

• You can adjust inputs like corpus size, withdrawal amount, or expected returns to compare how one-time redemption and SWP impact capital gains and choose a more tax-efficient withdrawal method.
• Since the remaining corpus continues to earn returns, your investments can last longer while still giving you regular payouts.
• The calculator handles all variations and scenarios, making it easier to plan systematic withdrawals without manual calculations.
• It is easy to use; just enter the required details, and it instantly shows results based on your inputs.
• You can test multiple withdrawal combinations to find the most suitable option for long-term financial stability.
• Lower withdrawals generally help your investment grow for a longer period, while higher withdrawals can reduce the corpus faster and affect its future growth.

SWP Calculator Formula: How Returns are Calculated

The SWP calculator by YES SECURITIES estimates how your mutual fund corpus grows or depletes over time, based on your monthly withdrawals and the expected rate of return. It uses a variation of the compound interest formula to show how long your investment will last or the value of your remaining corpus.

Key Inputs Used in the Calculation

• Initial Investment (Corpus):The amount you start with in the mutual fund.
• Monthly Withdrawal (SWP Amount): The fixed sum you choose to withdraw every month.
• Expected Annual Return: The anticipated yearly return on your mutual fund, expressed as a percentage.
• Investment Tenure: The time period for which you remain invested while making withdrawals.

Generic Formula Used

A commonly used formula to estimate future value or remaining corpus is:

Understanding the Variables

• A: Future value or balance of the investment
• PMT: Monthly withdrawal or periodic cash flow
• r: Expected rate of return (decimal form)
• n: Number of compounding periods in a year
• t: Total duration (in years)

This formula calculates how your corpus behaves over time by considering:

• The regular withdrawals you make (PMT),
• How frequently returns are compounded (n),
• The growth rate of the investment (r), and
• How long the investment continues (t).

In simple terms, the calculator helps show whether your withdrawals are sustainable and how much your remaining corpus may grow as it continues to earn returns.

Example of Systematic Withdrawal Plan

To understand how an SWP works in real life, let’s look at a simple example. The SWP helps you receive a fixed monthly payout while the remaining amount continues to earn returns.

• Initial Investment: ₹60,000
• Monthly Withdrawal: ₹1,500
• Tenure: 12 months
• Expected Annual Return: 10% (compounded monthly)

As the investor withdraws ₹1,500 each month, the balance keeps earning interest. Here’s how the corpus gradually reduces while still generating returns.

Monthly SWP Example:

Note: The above table provides only estimated values. Please use the calculator to determine the exact amount.

Advantages of using the YES SECURITIES SWP calculator

Here are some advantages of using the SWP calculator:

• Simplifies complex calculations: Helps you understand your potential returns with ease.
• Accurate planning: The SWP calculator gives you clear and accurate projections of how your mutual fund investment may grow. It shows how different withdrawal amounts or time periods can affect your returns, helping you choose a plan that fits your financial goals.
• Easy to use: Just enter your investment amount, expected rate of return, withdrawal amount, and duration. The YES SECURITIES SWP calculator instantly shows your estimated returns, making it simple to understand how your plan will work.
• Free and accessible: The calculator is available online at no cost, and you can use it as many times as you want. All you need is an internet-enabled device.

Overall, the YES SECURITIES SWP calculator helps you make informed decisions, set practical goals, and plan your withdrawals better so you can get the most out of your mutual fund investments.

Key Factors to Consider Before Starting a Systematic Withdrawal Plan (SWP)

Below are some key factors that you should consider before taking a step towards SWP:

• Define Your Goals: Know why you need an SWP, whether for monthly expenses, retirement income, or education needs. Your goals help decide the withdrawal amount, frequency, and fund type.
• Choose the Right Mutual Fund: Pick funds that match your risk level. Debt funds offer stability, hybrid funds balance risk and growth, and equity funds suit long-term investors with a higher risk appetite.
• Set a Suitable Withdrawal Rate: Decide how much and how often you want to withdraw so your funds last longer while still meeting your needs.
• Consider Market Changes and Inflation: Market ups and downs and rising costs can affect returns, so choose investments that can handle these situations.
• Check Tax Rules: Understand how capital gains tax applies to your withdrawals to plan efficiently.
• Ensure Flexibility: Choose an SWP that lets you change, pause, or increase withdrawals when needed.
• Review Regularly: Monitor your plan each year and adjust based on fund performance and changing financial needs.