SWP (Systematic Withdrawal Plan) Calculator

An SWP Calculator allows you to allows you to calculate your periodic withdrawal amount of your mutual fund investments under a Systematic Withdrawal Plan.

At HDFC Sky, we believe in empowering you with the right tools and knowledge for your financial journey. Let’s break down SWPs and how our calculators can assist you.

What is SWP?

A Systematic Withdrawal Plan (SWP) is a facility offered by mutual funds that allows investors to withdraw a predetermined amount of money at regular intervals (like monthly, quarterly, etc.) from their existing mutual fund investment. With an SWP, you withdraw regularly, which provides a steady cash flow, making it popular among retirees or anyone needing consistent income.

What is the SWP Calculator?

An SWP Calculator is an online financial tool designed to help you estimate what will be your withdrawal amount under a Systematic Withdrawal Plan. It projects the potential cash flows you can receive and how your initial investment value might change over time, based on the inputs you provide.

How Does SWP Calculator work?

SWP return calculators calculates the regular flow of income or withdrawal amount you will receive based on the following inputs

1. Total Investment: The initial lump sum amount you have invested or plan to invest.
2. Withdrawal Amount: The fixed amount you wish to withdraw periodically (e.g., monthly).
3. Expected Rate of Return (Annual %): Your anticipated average annual return on the investment. This is a crucial assumption, as actual returns will vary.
4. Investment Tenure: The duration (in years or months) for which you plan to run the SWP.

Based on these inputs, the SWP calculator online performs iterative calculations, typically on a monthly basis:

• It calculates the estimated growth of the investment balance for the period
• It subtracts the specified withdrawal amount
• It shows the projected remaining balance
• It repeats this for the entire tenure, providing a summary of total withdrawals and the estimated final value of the investment

How Can a SWP Calculator Assist You?

An SWP calculator in mutual fund is a valuable planning assistant. It helps you:

• Estimate Income: Get a clear picture of the regular income you could potentially receive.
• Assess Sustainability: Understand if your investment corpus is likely to last for your desired withdrawal period at your chosen rate.
• Scenario Planning: Easily compare different scenarios by changing withdrawal amounts, expected returns, or investment tenure.
• Goal Setting: Determine how much corpus you might need to generate a specific desired monthly income.
• Visualise Impact: See the potential long-term effect of withdrawals and market returns on your investment .

What is the SWP Calculator Formula?

While online calculators handle the complex iterations instantly, the underlying principle involves calculating the future value month by month. A simplified concept for one month is:

• Monthly Return Rate: (Expected Annual Return / 12)
• Opening Balance: Investment value at the start of the month.
• Growth for the Month: Opening Balance * Monthly Return Rate
• Balance Before Withdrawal: Opening Balance + Growth for the Month
• Closing Balance: Balance Before Withdrawal – Monthly Withdrawal Amount

The calculator repeats this calculation for each month over the entire tenure, compounding the returns on the remaining balance.

How to Use the SWP Calculator?

Using an SWP plan calculator, like the one accessible through HDFC Sky , is straightforward:

1. Navigate: Go to the SWP Calculator tool on our platform
2. Enter Total Investment: Input the amount you have invested (e.g., ₹25,00,000)
3. Enter Withdrawal Amount: Input the monthly amount you wish to withdraw (e.g., ₹20,000)
4. Enter Expected Return: Input the anticipated annual rate of return (e.g., 9%)aa
5. Enter Tenure: Input the duration you plan the SWP for (e.g., 15 years)
6. Calculate: Click the ‘Calculate’ or ‘Submit’ button
7. Review Results: The calculator will display the estimated total amount withdrawn over the tenure, the projected final value of your investment, and often a year-wise or month-wise breakdown.

Example of Systematic Withdrawal Plan

Let’s consider an initial investment of ₹30,00,000. We’ll explore different scenarios using an SWP investment calculator.

Base Scenario:

• Investment: ₹30,00,000
• Monthly Withdrawal: ₹20,000
• Expected Return: 8% p.a. (approx 0.643% monthly)
• Tenure: 15 years (180 months)

Calculation for Month 1:

• Growth: ₹30,00,000 * (8%/12) ≈ ₹19,290
• Balance before withdrawal: ₹30,00,000 + ₹19,290 = ₹30,19,290
• Balance after withdrawal: ₹30,19,290 – ₹20,000 = ₹29,99,290

Calculation for Month 2:

• Growth: ₹29,99,290 * (8%/12) ≈ ₹19,285
• Balance before withdrawal: ₹29,99,290 + ₹19,285 = ₹30,18,575
• Balance after withdrawal: ₹30,18,575 – ₹20,000 = ₹29,98,575 (Note: These are simplified; actual NAV fluctuations add complexity)

Scenario Comparison Table:

Scenario	Monthly Withdrawal (₹ )	Expected Return (% p.a.)	Tenure (Years)	Total Withdrawn (₹ lakh)	Est. Final Corpus (₹ lakh)	Effect on Corpus
Base	20,000	8%	15	₹36.00	₹28.97	Corpus slightly depleted but still substantial
Higher Withdrawal	25,000	8%	15	₹45.00	₹12.15	Higher withdrawal depletes the corpus faster
Lower Return	20,000	6%	15	₹36.00	₹5.80	Lower returns significantly impact the final value
Higher Return	20,000	10%	15	₹36.00	₹55.20	Higher returns can lead to corpus growth
Longer Tenure	20,000	8%	20	₹48.00	₹21.10	Corpus depletes more over a longer period

 

(Note: These are illustrative figures generated conceptually based on SWP principles)

This table clearly shows how changing withdrawal amounts, expected returns, and tenure can dramatically affect the outcome of your SWP and the longevity of your investment.

How can a SWP calculator benefit you?

Using an SWP calculator provides several key benefits:

• Informed Decision Making: Helps you make educated choices about withdrawal amounts and tenure based on potential outcomes.
• Retirement Planning: Crucial for estimating how much income your retirement corpus can generate.
• Financial Discipline:  Visualising the plan encourages sticking to a disciplined withdrawal strategy.
• Risk Assessment: By testing different return rates (e.g., a conservative vs. an optimistic rate), you can understand the potential risks.
• Clarity and Confidence: Provides a clearer picture of your future cash flows, potentially increasing your financial confidence.

Disclaimer : The results given by the above calculator are for illustration purpose only. They are often based on a number of assumptions. The results given are in no way any guarantee of the returns that will be given. Investments in stock markets and securities markets are subject to market risks and other risks. There is no guarantee of the return that will be actually given. Investment in other financial products may also be subject to market risks and other risks. There is no guarantee of the returns that will be given by them. The calculator also does not make any recommendation directly or indirectly. Please consult a registered Financial Advisor before taking any investment decision.