Withdrawal per Month
Expected return rate (P.A)
Systematic Withdrawal Plan Calculator (SWP Calculator)
Investors often aspire to have regular income and returns on their investments. Catering to this, a systematic withdrawal plan allows an individual to withdraw a fixed or variable amount monthly, quarterly, half-yearly, and annually.
To ease the calculation of withdrawal from a mutual fund investment, one can use an SWP calculator.
Computing the maturity sum based on withdrawals manually can be a tedious job. Therefore, it is imperative to use a systematic withdrawal plan calculator for such complicated calculations.
In this article, you will find every detail on this calculator, including its working and benefits.
So, without further delay, keep reading to know more!
What is an SWP calculator?
An SWP calculator shows the amount left from a mutual fund scheme after withdrawal. It performs complex calculations to generate the final value an investor holds in his account. The retired personnel can expect to receive regular income after utilising this calculator. This calculator obtains accurate results in a matter of seconds, making it a convenient option among mutual fund investors.
One can accrue benefits from this calculator only after understanding its workings. Therefore, take a look at the following sections to gain clarity regarding the same.
How does an SWP calculator work?
A systematic withdrawal plan calculator consists of a formula box where one needs to input the following information:
- Total investment amount
- Monthly withdrawal
- Annual return rate (expected)
- Investment tenure
Alternatively, one might use a complex mathematical formula for SWP calculation. You can take a look at the formula below.
A = PMT ((1+r/n)^nt – 1) / (r/n))
Let us break the components of the given formula and understand them precisely.
- A: This is the future value of an investment. In simple terms, this is the value of a current asset based on an estimated growth rate.
- PMT: PMT is a payment per period in terms of finance.
- r: This signifies an annual rate of return.
- n: Compound numbers in a given period are denoted by "n."
- t: This is the number of periods in which an amount is invested.
To simplify the workings of an SWP calculator further, let us refer to an example.
For instance, an individual has invested Rs.60,000 for a tenure of 1 year and follows a systematic withdrawal of Rs.1000 per month. Further, the expected rate of returns stands at 10%. After monthly withdrawal, the final value at the end of 12 months is Rs.53,459. When you calculate this manually, it becomes difficult and leaves scope for inaccuracy. However, an SWP calculator brings out accurate values in seconds.
Now that you know about the working of this calculator, it is vital to learn about the several ways to use it.
How to use an SWP calculator?
This calculator is easy and convenient to use, especially for beginners. Here are the steps to follow while using a systematic withdrawal plan calculator.
- Firstly, you need to enter your total amount of investment.
- Upon entering the amount, fill in a withdrawal value you wish to make per month or quarterly.
- Submit the tenure of your investment.
- Give an expected rate of return in percentage.
- Within seconds you will be able to view the entire breakdown and obtain the final value. The breakdown will also cover the total withdrawal, total investment and earned interest.
Therefore, it is evident that the calculator clarifies the regular cash flows through a systematic withdrawal plan.
Now let us focus on some of the benefits of using this calculator.
What are the uses of the SWP calculator?
Senior citizens and retired personnel are such investors who require a steady flow of financial input. Apart from the pension money, an SWP will offer them the option of regular income. Therefore, using a calculator for that purpose follows a series of benefits as mentioned here.
- One of the advantages of the SWP calculator includes the easy computation and accurate results of earned interest and total return value on your investment after a certain tenure.
- The calculator enables a user to change the withdrawal amounts and obtain a maturity value accordingly.
- This calculator is easily accessible as it is available online.
- Operating on this calculator does not demand expertise. Whether you are a novice or an experienced investor, you can use an SWP calculator by inputting the values in the required field.
- Using this calculator, one can find out the best monthly or quarterly amounts from his or her respective scheme.
- Further, this calculator helps in the determination of surplus funds. These funds can be used in other financial instruments as per the investor's requirements.
Therefore, an SWP is one of the convenient ways in which investors can receive a fixed monthly income. However, planning the withdrawals and estimating the return value from an investment manually is time-consuming. Hence, it is advisable to settle for a seamless calculation procedure by opting for an SWP calculator.