A regular investor in mutual funds will be familiar with the terms like SWP, i.e., systematic withdrawal plan. SWP is a withdrawal scheme that will help you earn regular income from your investment in the mutual fund. When investing in a mutual fund, you can set the amount to be withdrawn from the corpus every month with the help of a systematic withdrawal plan calculator. Additionally, this online calculator shows the remaining principal invested amount after withdrawing the amount. Now that not all can do complex mathematical calculations, the SWP calculator is a great tool. Read this article to learn more about the SWP calculator.
What is SWP?
Before getting into the nuances of the swp calculator, you should know what a systematic withdrawal plan is.
When investing in mutual funds, an investor is offered a structured drawdown plan by the mutual funds. It is the plan where you can set a fixed amount to be withdrawn periodically from the scheme or instruct the fund house the withdraw the fixed capital gains from your investment. Withdrawing a fixed small amount of the corpus is more beneficial than withdrawing the entire lump sum amount in one go. This is because the remaining funds in the mutual funds continue to earn fixed or variable returns.
Here given is the mathematical formula for the swp calculation:
A = PMT [(1 + r/n)^nt – 1) / (r/n)] A
A = Future value of the investment
PMT = Payment amount for each period
n = Number of compounds in a given period
r = Expected rate of return
t = Number of periods for which money is invested
What do you mean by SWP calculator?
The SWP calculator or systematic withdrawal plan calculator is a tool that displays the amount of money removed from mutual fund investments regularly. In addition, the calculator displays the total amount invested in the mutual fund after making the withdrawal of the predetermined amount.
The online SWP calculator will have a formula box where you must enter your information to calculate the entire mutual fund investment, withdrawal amount, and the ultimate value of the mutual fund investment after all withdrawals.
What are the inputs and outputs of the SWP calculator?
Inputs of SWP calculator:
Here listed are the inputs as required by the best SWP calculator:
- Total Investment: It is the total amount invested in the mutual fund scheme
- Withdrawal Amount: It is the amount that an investor wishes to withdraw every month, quarter, or a year from the mutual fund investment
- Expected return: It is the expected rate of annual return from the mutual fund investment, also known as the swp interest rate.
- Time Period: It is the time period or number of years for which an investor will keep withdrawing funds periodically
Outputs of SWP calculator:
Based on these given output calculations are made by the SWP calculator to provide you with these mentioned outputs:
- Total investment: Total amount that an investor has invested in the mutual funds (similar to the input)
- Total withdrawal: It is the total amount that an investor would have withdrawn during the entire SWP time period
- Final Value: It is the final value of the mutual fund investment after deducting the total withdrawal amount
How would you use the SWP calculator?
SWP calculator available online makes it easier to find the SWP investment over a given period. To use the swp return calculator, follow the below-given steps and enter the required details in the formula box:
- Enter the total value of the mutual fund investment
- Next, fill in the per month withdrawal value, quarter, or year from the investment made in the specific scheme of the mutual fund.
- Fill in the rate of return that is expected.
- Fill the tenure of investment in years.
- After entering all details, click the ‘continue’ icon.
- Now, the SWP calculator provides you with the total mutual fund investment, the total amount to be withdrawn, the total value of the interest earned, and also the ultimate/ final amount of the invested amount after all the withdrawals.
What are the benefits of using the SWP calculator?
Now that you are aware of the systematic withdrawal plan, its formula, the SWP calculator, and how to use it, it’s time to learn how the swp plan calculator is beneficial. The following mentioned are some major benefits of the SWP calculator online:
- SWP online calculator is easy to access and use.
- A systematic withdrawal plan ensures monthly returns while the return on investment is generated on the total investment. The SWP calculator makes it easier to calculate both these values.
- You can easily set the amount which you want to withdraw periodically and calculate the final value of the investment accordingly.
- You need not be an expert to use the SWP calculator. All you need to do is put the right variables in a given space, and results will be shown within no time.
- The SWP calculators are flexible to use, and thus, you can change the input variables to get different results. This further helps the investor in comparing different SWP plans for his mutual fund investment and get figure out the best plan.
- With the SWP calculator, you can know the final value of the investment after the SWP ends. This allows the investor to plan his investment in a mutual fund in advance.
- Moreover, some online SWP calculators help you determine the SWP surplus, which you can plan to invest in other financial instruments.
The systematic withdrawal plan, or SWP, is considered one of the best ways to earn a secure income from mutual fund investments. Rather than withdrawing the entire amount at once, an investor should withdraw small amounts every month so that the remaining mutual fund investment can get him more returns. If you don’t want to get involved in the complex manual calculation of the SWP, then SWP online calculator is a great tool for you. This calculator helps in choosing the right SWP for a mutual fund investment which further can optimize your returns.