Systematic Withdrawal Plan Calculator
A systematic withdrawal plan (SWP) can help you get a regular amount every month just by making a one-time investment. An SWP calculator enables you to evaluate the monthly returns you get and how long your corpus will last. Let us understand how it works and what the benefits of using this calculator are.
What is an SWP Calculator?
An SWP provides a regular income from your investments. In a dividend or interest, the principal remains constant. However, the SWP withdraws either the principal or the appreciation every month, which ensures a steady cash flow. An SWP calculator is a financial tool that calculates your monthly inflows from an SWP scheme.
Depending on the corpus and the return you get on the invested funds, you can calculate how much you can withdraw each month using this calculator. You can withdraw these amounts monthly, quarterly, or annually.
The systematic withdrawal plan calculator requires you to provide some inputs. You need to provide your total investment amount, investment tenure, withdrawal amount, and expected return.
How Does an SWP Calculator Function?
An SWP calculator calculates the future value of your mutual fund investments depending on your total investment amount, withdrawal each month, expected annual rate of return, and your investment tenure. To understand how an SWP calculator works, you need to understand its formula and calculation.
A = B ((1+r/n)^nt – 1) / (r/n)
In this formula,
For example, you have invested INR 2,00,000 for 24 months in a mutual fund SWP scheme that provides a monthly income or withdrawal of INR 5,000 at 8% annual rate of return. At the end of each month, INR 5,000 will be deducted from the balance at the beginning of each month, and an interest of (8/12=0.6666%) per month will be added to the remaining balance.
This remaining balance, added to the interest, will become the balance at the beginning of the next month. The total return from this investment will be:
(Balance after 24 months + total amount withdrawn) - initial investment
INR (1,03,968 + 1,20,000 - ₹2,00,000) = INR 23,968
How to Utilise the PL Capital's SWP Calculator?
You need to visit the PL Capital Group – Prabudas Lilladher website or application to use its SWP calculator and follow the steps below:
1. Enter the total investment amount, which you want to invest initially.
2. Add your monthly withdrawal amount from your investment at the end of each month.
3. Enter your expected returns that you want to gain annually. You must know that the final return you actually receive will be lower than this percentage value. The reason is that you will be withdrawing from your total investment amount periodically.
4. Provide the duration you wish to invest.
Once you have provided all these details, the PL Capital systematic withdrawal plan calculator will show you the following details:
1. Your total invested amount
2. Your total withdrawal amount
3. The remaining amount at the end of the investment duration.
How Can an SWP Calculator Assist You?
An SWP calculator shows how much you can withdraw from your investment corpus each month. In addition, this calculator also tells you how long your corpus will last.
The SWP calculator is simple to use and does not require any special expertise to see the results. Once you provide the required details, you can see the output in a second. This calculator also helps you to try different combinations and select the one SWP plan that aligns with you best.
The lesser the withdrawal amount and the longer the investment tenure, the better the returns and growth of your investment corpus. However, if you withdraw a higher amount, it can impact the balance corpus, which affects the growth and longevity of the corpus.
Benefits of using PL Capital's SWP Calculator
There are some benefits of using PL Capital’s SWP calculator. Some of them are explained below:
1. Easy to Use
PL’s SWP calculator is an easy-to-use tool in which you can easily enter the amount you want to invest, the rate of return, the total investment tenure, and the withdrawal amount. This helps you to know how much return you will earn from a particular mutual fund SWP scheme.
2. Accurate Planning
The SWP return calculator by PL Capital provides you with precise calculations regarding the future value of your mutual fund investments.
3. Free to Use
You can use an SWP calculator online, and it is completely free. Irrespective of how many times you use it, this calculator is completely free. You can use it anytime, with any device, from any location, with a stable internet connection.
4. Comparisons
You can also compare different investment scenarios with an SWP calculator. You can compare situations with variations in investment amount, withdrawal amount, and expected returns. This benefits you to make informed investment decisions, analysing your potential gains and losses, and plan to grow your corpus.
Factors to Consider Before Investing in an SWP
Before you invest in a mutual fund SWP plan, you must consider the factors below:
1. Portfolio Allocation
You must carefully allocate assets to balance the income generation and capital preservation.
2. Necessary Funds
It is also important to have a sufficient investment corpus to make regular withdrawals without finishing the principal too early.
3. Market Volatility
Before investing in an SWP, you must analyse market volatility, since fluctuations can impact your overall returns. You must adjust withdrawal amounts according to your risk tolerance.
4. Comparison of Scenarios
Always compare different investment scenarios using an SWP calculator. By entering different principal amounts, investment tenure, and rate of annual returns, you can find out which strategy is more profitable for you.
5. Investment Horizon
You must also consider your investment time horizon and align it with the frequency of withdrawals and the amount to make your income sustainable.
