SWP (Systematic Withdrawal Plan) Calculator
Total Investment
Total Withdrawal
Final Value
₹ 0.00
₹ 0.00
₹ 0.00
Understanding the Systematic Withdrawal Plan (SWP) Calculator
A Systematic Withdrawal Plan (SWP) is a popular financial tool used to withdraw a fixed amount of money from your investments at regular intervals, while the remainder continues to grow with interest. It is an excellent strategy for individuals looking to create a steady income stream, especially during retirement. Here’s an explanation of how the SWP Calculator works, using an example investment of ₹500,000 over 1 year, with a monthly withdrawal of ₹10,000.
Key Components of SWP Calculation:
Total Investment (₹): This is the amount you initially invest in the plan. In our example, you start with an investment of ₹500,000.
Withdrawal Per Month (₹): This is the fixed amount you choose to withdraw each month. In this case, you opt for a withdrawal of ₹10,000 per month.
Expected Return Rate (p.a.): This represents the anticipated annual rate of return on your investment. For this example, we assume an 8% annual return.
Time Period (Years): The total duration for which you plan to make withdrawals from your investment. In this scenario, you choose a period of 1 year.
How SWP Works: Example Calculation
Let’s understand how your investment works over the course of 1 year when withdrawals are made at a fixed rate.
| Year | Withdrawal (₹) | Interest Earned (₹) | Remaining Investment (₹) |
|---|---|---|---|
| 1 | ₹10,000 per month | ₹33,000 | ₹500,000 – ₹120,000 + ₹33,000 interest = ₹413,000 |
| Total | ₹120,000 | ₹33,000 | ₹413,000 |
Details of Each Column:
Withdrawal (₹): Every month, ₹10,000 is withdrawn from your investment.
Interest Earned (₹): Over the year, you earn interest at the rate of 8% p.a. The interest is added to your remaining balance monthly, as your investment continues to grow despite withdrawals.
Remaining Investment (₹): This is the remaining corpus after withdrawals and interest. The remaining amount gradually decreases over the year as the monthly withdrawals are made.