SWP Calculator

What is a Systematic Withdrawal Plan (SWP)?

A Systematic Withdrawal Plan (SWP) is a facility offered by mutual funds that allows investors to withdraw a fixed amount from their mutual fund investment at regular intervals (usually monthly). Unlike a lumpsum redemption, SWP provides a steady income stream while the remaining investment continues to earn returns. It is particularly popular among retirees and those seeking regular income from their investments.

How to Use This SWP Calculator

Enter your total investment amount, the monthly withdrawal amount you need, the expected annual return rate, and the time period. The calculator will show:

• Total Invested: Your initial corpus.
• Total Withdrawn: Total amount withdrawn over the entire period.
• Final Balance: Remaining investment value at the end.
• Total Returns Earned: Interest/returns earned during the SWP period.
• Yearly Summary Table: Year-by-year breakdown of withdrawals and balance.

Formula

The SWP calculation works month by month:

Each month: New Balance = Previous Balance x (1 + Annual Rate / 1200) - Monthly Withdrawal

The process continues until the time period ends or the balance reaches zero. The monthly return is calculated by dividing the annual return rate by 12 (hence dividing by 1200 when the rate is in percentage).

For example, with ₹50,00,000 invested at 8% p.a. and ₹30,000 monthly withdrawal: Month 1 balance = 50,00,000 x 1.00667 - 30,000 = ₹50,03,333. The remaining balance continues to grow while withdrawals are made.

Frequently Asked Questions

What happens if my withdrawal amount is more than the returns?

If your monthly withdrawal exceeds the monthly returns, the difference is taken from your principal. Over time, this will deplete your corpus. If the balance reaches zero before the time period ends, the calculator will show when the money runs out.

SWP vs FD for regular income - which is better?

SWP from equity or balanced mutual funds can potentially offer higher returns than FD, and the taxation is more favourable (long-term capital gains tax vs income tax on FD interest). However, SWP returns are market-linked and not guaranteed, while FD offers fixed returns. SWP is suitable for those with a moderate risk appetite.

Is SWP tax-efficient?

Yes, SWP is generally more tax-efficient than FD interest. Each SWP withdrawal is treated as a partial redemption of mutual fund units. Only the capital gains portion of each withdrawal is taxed, not the entire withdrawal amount. Long-term capital gains on equity funds above ₹1 lakh are taxed at 10%.