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SWP Calculator

Use Bajaj Finserv AMC’s SWP Calculator to plan regular withdrawals from your mutual fund investments, helping you create a steady income stream while optimising your portfolio for long-term growth potential.

Total Investment Amount
₹ 1,00,000
₹ 10,00,00,000
Withdrawal Per Month
₹ 20,000
₹ 10,00,000
After how many years you want to start your SWP
1 Year
20 Years
SWP Period (In Years)
1 Year
20 Years
Expected Rate of Return (in %)
2%
13%
Future Value of Invested Amount
₹ 0
Number of Withdrawals
₹ 0

Total Withdrawal Amount
₹ 0

#
Final Balance Amount
₹ 0
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What is an SWP (Systematic Withdrawal Plan)?

 

A Systematic Withdrawal Plan (SWP) is an investment strategy that allows an investor to withdraw a fixed amount from their mutual fund on a regular basis (monthly, quarterly, etc.). Instead of redeeming the entire investment at once, an SWP enables the investor to take out smaller portions of their investments while the balance amount continues to potentially grow with market exposure.

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What is an SWP calculator?

An SWP calculator is an online tool that simplifies the process of planning withdrawals from mutual funds. By entering basic details such as the total investment amount, desired withdrawal duration, withdrawal amount, and expected rate of return on investments, the SWP calculator can quickly determine how much you can withdraw regularly and how these withdrawals impact your final investment value.

How does an SWP calculator work?

An SWP calculator shows you how many periodic withdrawals you can potentially make from your mutual fund investment based on your initial investment amount, expected rate of return, tenure till SWP starts and planned withdrawal amount. Based on these, it tells you the future value of your current investments, the number of withdrawals you can potentially make, the total withdrawal amount and your balance corpus amount at the end of your SWP tenures. Accordingly, you can see if the amount you are planning to withdraw aligns with your requirements and future investment value.

What is the SWP calculator formula?

Each calculator may have a different formula depending on its features. However, the SWP formula is as follows:

A = PMT ((1+r/n)^nt-1)/(r/n))

Where:
'A' is the final value of your investment
'PMT' is the withdrawal amount per period
'n' is compounding frequency
't' is the investment duration

Consider this example:

Initial Investment amount: Rs. 10,00,000
SWP tenure: 5 years • Desired monthly withdrawal: Rs. 20,000
Expected Rate of Return: 12%

Month Starting Balance (Rs.) Monthly Return (Rs.) Monthly Withdrawal (Rs.) Ending Balance (Rs.)
1 1,000,000 9,488.79 20,000 989,488.79
2 989,488.79 9,389.05 20,000 978,877.85
3 978,877.85 9,288.37 20,000 968,166.22
4 968,166.22 9,186.73 20,000 957,352.95
5 957,352.95 9,084.12 20,000 946,437.07
6 946,437.07 8,980.55 20,000 935,417.61
7 935,417.61 8,875.98 20,000 924,293.60
8 924,293.60 8,770.43 20,000 913,064.03
9 913,064.03 8,663.88 20,000 901,727.90
10 901,727.90 8,556.31 20,000 890,284.21

Using the above formula, you will see that your final investment value at the end of your tenure will potentially be Rs 1.6 lakh (approx.) if growth happens along expected lines. However, mutual fund returns are not guaranteed and can fluctuate based on market conditions.

Tax implications of systematic withdrawal plans

SWP is treated as a redemption for taxation purposes. So, withdrawals are subject to capital gains tax. The tax structure is as follows:

  • Equity funds:
    • Withdrawal of units held for more than 1 year: Taxed as long-term capital gains. LTCG of up to Rs. 1.25 lakh is tax-exempt. Thereon, the tax rate is 12.5%.
    • Units held for less than 1 year: Taxed as short-term capital gains, at a rate of 20% with no exemptions.
  • Debt funds:
    • Deemed to be STCG and taxed as per the investor’s applicable income tax slab, regardless of the holding period.

Tax is calculated on a FIFO (first-in, first-out) basis – older units are sold first, and the holding period is determined accordingly. Since SWP involves withdrawals, careful planning can help reduce tax liability while facilitating potentially steady income.

SWP vs. SIP vs. lumpsum: Which investment strategy suits you?

The choice between SWP and SIP or lumpsum depends on your goal – are you primarily looking to grow wealth over time, or generate an income stream for your investments? SIP and lumpsum are more suitable for those looking to build a corpus for the long term, while SWP is more suitable for investors who have accumulated some capital and are now looking for income from their investments.

  • SIP (Systematic Investment Plan): Suitable for steady, long-term investing. Allows investors to invest an affordable amount at regular intervals. It spreads the cost of the investment over time and mitigates market timing risk through rupee cost averaging.
  • Lumpsum investment: Suitable for those with surplus funds. It can yield higher potential returns in a rising market. However, market timing plays an important role, resulting in higher risk.
  • SWP (Systematic Withdrawal Plan): Suitable for those needing regular income, like retirees. It allows you to withdraw systematically while keeping the rest invested for potential growth. So, the suitable strategy depends on your financial goals and cash flow needs. Investors may even combine both approaches to generate an income stream in the present while also investing for the future.

So, the suitable strategy depends on your financial goals and cash flow needs. Investors may even combine both approaches to generate an income stream in the present while also investing for the future.

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How to use Bajaj Finserv AMC SWP calculator online?

Using a Systematic Withdrawal Plan calculator is straightforward:
Step 1: Enter the current value of your mutual fund investment.

Step 2: Specify the exact amount you wish to withdraw each month

Step 3: Specify the number of years after which you wish to start the SWP and mention the SWP duration.

Step 4: Specify the estimated rate of return at which your investment could grow. The SWP mutual fund calculator will then tell you how much you have withdrawn and give you the final value of your investment.

 

how to use
SWP, or Systematic Withdrawal Plan, is a valuable tool in the realm of investing. It provides a reliable method to ensure a consistent flow of funds, offering investors a sense of certainty regarding their cash flow. Regardless of one's experience in investing, SWP can be effectively utilized by anyone to meet specific financial objectives.
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Benefits of Systematic Withdrawal Plan (SWP)

 

There are numerous benefits associated with opting for SWP in mutual funds. Here are some key advantages

Regular inflow of funds

Systematic Withdrawal Plan allows investors to receive a steady stream of income regularly. This feature is particularly advantageous for retirees who depend on their investments to generate income.

Capital appreciation

Even as withdrawals are made, the remaining units in the mutual fund continue to generate returns. This potential for capital appreciation enhances the overall value of the investment over time.

Flexibility

Investors have the flexibility to choose both the amount of each withdrawal and the frequency at which withdrawals are made. This flexibility caters to varying financial needs and goals.

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Advantages of SWP Calculator

 
1. Plan regular income:

Helps plan and maintain a steady income stream.

2. Portfolio management:

Assists in balancing investments while withdrawing funds.

3. Tax efficiency:

Facilitates tax planning by optimizing withdrawal amounts.

4. Goal planning:

Supports financial goals by ensuring a structured withdrawal strategy.

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Frequently Asked Questions

 
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SWP stands for Systematic Withdrawal Plan, a facility offered by mutual funds where investors can withdraw a fixed amount or a percentage of their investment regularly. An SWP calculator can help plan this withdrawal strategy.

Yes, withdrawals made through SWP are subject to taxation based on the capital gains incurred. However, tax implications can vary based on the holding period and type of mutual fund.

Yes, SWP amounts can be adjusted later based on your financial needs and the performance of your investments. Most SWP facilities allow flexibility in modifying withdrawal amounts. Similarly, you can use a SIP to invest regularly, and a SIP calculator can help you determine the optimal contribution to reach your financial goals.

Yes, you can stop or pause an SWP at any time. Mutual funds usually allow investors to modify or terminate their SWP instructions through their online portals or by contacting customer service.

If the market value of your investment drops significantly after starting SWP, the amount you receive from withdrawals may be affected. Depending on the performance of your investments, the amount of your withdrawals might need adjustment to ensure your investment lasts as planned. It's essential to monitor your investment's performance regularly and consider consulting with a financial advisor if needed.

A Systematic Withdrawal Plan (SWP) can be a suitable investment option for those seeking regular income from mutual funds, such as retirees or those needing steady cash flow. However, for those who seek long-term capital appreciation and do not need income in the near term, an SWP may not be suitable. As the principal amount reduces with each withdrawal, the growth potential of an SWP is lower than that of an SIP or lumpsum growth investment where the invested capital remains untouched. Using an SWP calculator can help assess the efficacy of an SWP strategy when compared to SIP or lumpsum.

The Systematic Withdrawal Plan calculator gives accurate estimates based on your inputs. However, there is no guarantee that these objectives will be achieved. The calculator assumes a fixed and constant rate of return for its estimates. In reality, mutual fund returns are not fixed or guaranteed and can fluctuate depending on market conditions. Hence, the SWP mutual fund calculator’s output should be used as a rough estimate that can assist in investment planning, and not as a projection of investment returns.

Yes, SWP mutual funds can offer tax-saving benefits compared to redeeming the entire investment amount or a large chunk of it. Capital gains on units withdrawn in a financial year will be taxable. The tax rate will depend on the holding period and the scheme category. For equity-oriented funds, capital gains on units held for more than a year are taxed as long-term capital gains. LTCG of up to Rs 1.25 lakh are tax-exempt. Thereon, a tax rate of 12.5% is levied. Short-term capital gains (on units held for under a year) are taxed as per the investor’s prevailing income tax slab.
For debt funds, capital gains are added to the investor’s income and taxed as per their tax slab, regardless of the holding period.
Thus, SWP mutual funds can be more tax-efficient because gains are withdrawn in a staggered manner.

Yes, non-retirees can use an SWP to create a steady cash flow, manage large expenses, or supplement income while maintaining some investment growth in mutual funds.

SWP and SIP serve different purposes: SWP withdraws funds periodically, while SIP invests steadily. SWP suits those needing regular income, whereas SIP is ideal for building wealth gradually.

SWPs are suited for retirees or those seeking periodic income without depleting their investment principal quickly. They’re beneficial for anyone wanting steady withdrawals rather than lump-sum withdrawals.

You can choose a withdrawal amount and frequency that suits you. However, there may be a minimum withdrawal amount (such as Rs. 1,000) and number of withdrawals. Those amounts can differ from one asset management company to another.

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Disclaimer: The calculator alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. This tool is created to explain basic financial /investment related concepts to investors. The tool is created for helping the investor take an informed decision and is not an investment process in itself. Mutual Fund does not provide guaranteed returns. Investors are advised to seek professional advice from financial, tax and legal advisor before investing.

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