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The Benefits of Using an SWP Calculator

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Published Date: 05 Aug 2024Updated Date: 30 Dec 20246 mins readBy MOFSL

Suppose you’re looking into a Systematic Withdrawal Plan (SWP). In that case, it’s handy to take out a set amount of money from your mutual fund regularly—whether monthly, quarterly, or semi-annually. Before you get started, let’s go over some of its benefits.

 

How does SWP work?

 

SWP is better explained with an example. Here’s how it works-

 

Let’s say you invest Rs. 5 lakh in Fund X with an NAV of Rs. 100. So you have 5000 units of the fund. If you want a monthly income of Rs. 10,000, here’s a simplified example of how a SWP might work:

Month
Income Flow (Rs.) NAV Units Redeemed Units Remaining Investment Value (NAV x Units) (Rs.)
January 5,00,000 100 0 5000 5,00,000
February -10,000 103 97 4903 5,05,000
March -10,000 102 98 4805 4,90,097
April -10,000 105 95 4710 4,94,512
May -10,000 108 93 4617 4,98,641
June -10,000 106 94 4523 4,79,407

Note: This table is for illustration purposes only.

This example shows that if you withdraw Rs. 10,000 each month, your units decrease to around 4900 in the first month. After five months, you’ve withdrawn Rs. 50,000. But with the market changes, the NAV increases, and your portfolio value grows to Rs. 4,79,407. This shows how rupee cost averaging with SWP helps your investment grow even while making withdrawals.

How can an SWP calculator help you?

An SWP lets you invest a certain amount and then withdraw a portion each month. After each withdrawal, the amount you took out is deducted from your investment, but the rest keeps earning interest. 

Here’s how it can help

  • It does all the calculations for you, so you don’t have to stress about the numbers.

  • You can see how different withdrawal amounts affect your investment and plan accordingly.

  • It’s simple to use—just input your details, and it takes care of the rest.

  • Get precise projections of your returns and portfolio value.

  • It’s available anytime, so you can make quick adjustments or checks whenever you need.

  • It helps ensure your SWP plan matches your financial needs.

How to use the SWP Calculator?

The calculator is straightforward. You will have to fill out the four fields: amount invested, withdrawal amount, expected return, and tenure. Once you enter these details, the calculator will show you the total amount you’ve invested, total withdrawal, and balance.

So, whether you’re supplementing a pension or looking for an alternative source of income, an SWP can be a good option.


 

Financial Calculators: SIP Calculator | SWP Calculator | Compound Interest Calculator | EMI Calculator | FD Calculator | Retirement Calculator | Option Value Calculator | Inflation Calculator | Lumpsum Calculator

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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