SWP Calculator
Your Monthly Withdrawal Amount:
What is systematic withdrawal plan?
A Systematic Withdrawal Plan (SWP) is a financial plan offered by mutual fund companies, where an investor can withdraw a fixed amount or percentage of their investment at predetermined intervals, such as monthly or quarterly.
It allows the investor to receive a regular income stream from their investment while still staying invested in the mutual fund. SWP is a popular option for retirees or individuals looking for a steady stream of income from their investments.
How to use Systematic Withdrawal Plan calculator?
To use a Systematic Withdrawal Plan (SWP) calculator, you typically need to input the following information:
- Total invested amount
- Investment duration
- Expected rate of return
- SWP amount (the amount you want to withdraw periodically)
- Frequency of withdrawals (monthly, quarterly, annually)
Once you input these details, the calculator will give you an estimate of the expected returns and the duration of the withdrawal plan. You can then adjust the input values to see how it affects your returns and duration. SWP calculators can be helpful in planning your investments and withdrawals, and in making informed decisions about your financial goals.
Few Example of Systematic Withdrawal Plan
A Systematic Withdrawal Plan (SWP) is a method of withdrawing money from a mutual fund or other investment vehicle at predetermined intervals.
For example, let’s say an individual invests $100,000 in a mutual fund and sets up an SWP to withdraw $1,000 per month. The mutual fund will sell a predetermined number of units every month to provide the investor with the requested amount.
Over time, the investor’s investment in the mutual fund will decrease as they continue to receive regular payments. SWPs are often used as a way to generate regular income during retirement.
Here is the year by year example in detail:
Here is an example of interest earned through a Systematic Withdrawal Plan (SWP) over a period of 10 years:
| Year | Starting Balance | Annual Withdrawal | Annual Interest Rate | Interest Earned | Ending Balance |
|---|---|---|---|---|---|
| 1 | $100,000 | $10,000 | 5% | $5,000 | $95,000 |
| 2 | $95,000 | $10,000 | 5% | $4,750 | $89,750 |
| 3 | $89,750 | $10,000 | 5% | $4,488 | $83,238 |
| 4 | $83,238 | $10,000 | 5% | $4,162 | $77,400 |
| 5 | $77,400 | $10,000 | 5% | $3,870 | $72,270 |
| 6 | $72,270 | $10,000 | 5% | $3,614 | $67,883 |
| 7 | $67,883 | $10,000 | 5% | $3,394 | $64,277 |
| 8 | $64,277 | $10,000 | 5% | $3,214 | $61,491 |
| 9 | $61,491 | $10,000 | 5% | $3,075 | $59,566 |
| 10 | $59,566 | $10,000 | 5% | $2,978 | $58,544 |
In this example, an initial investment of $100,000 with an annual withdrawal of $10,000 and an annual interest rate of 5% is considered. The table shows the interest earned and ending balance for each year of the 10-year period. As the withdrawal amount remains constant, the interest earned reduces each year, resulting in a decrease in the ending balance over time.
What are the major benefits of SWP calculator?
The benefits of using an SWP calculator include:
- Helps in planning regular income: SWP calculator can help you plan your regular income by calculating the amount you can withdraw periodically.
- Avoids manual calculation errors: SWP calculator eliminates the possibility of manual calculation errors, making it more accurate and reliable.
- Helps in decision making: With the help of an SWP calculator, you can easily compare different withdrawal options and decide which one suits your financial goals the best.
- Saves time: SWP calculator saves time as it performs complex calculations within seconds and helps you make informed decisions quickly.
- Customizable: SWP calculator allows you to customize your withdrawal options by adjusting parameters such as withdrawal amount, frequency, and duration, giving you more control over your investments.