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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.
₹ 1,00,000
₹ 10,00,00,000
₹ 20,000
₹ 10,00,000
1 Year
20 Years
1 Year
20 Years
2%
13%
Future Value of Invested Amount
₹ 0
Number of Withdrawals
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Total Withdrawal Amount
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Final Balance Amount
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What is a Systematic Withdrawal Plan (SWP)?
The goal of investing is to potentially build wealth in the long term. But when that corpus has been built, how do you use that money? You may withdraw the entire amount at once – but there can be a more efficient way that may not only meet your income needs but also potentially allow your corpus to last longer.
With a Systematic Withdrawal Plan or SWP, you can withdraw a fixed amount from your mutual fund investment at regular intervals—monthly, quarterly, or as per your needs. Instead of redeeming your investment all at once, you get the flexibility to take out smaller amounts, while the rest of your money stays invested. This balance amount continues to get market exposure, which means it continues to potentially grow. Many people choose SWPs to create a potentially consistent cash flow. This can be especially useful if you're looking to supplement your income or manage regular expenses post-retirement.
In such cases, using a Systematic Withdrawal Plan calculator can help you understand how long your investment might last and what kind of withdrawals may be sustainable.
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What is an SWP calculator?
Planning withdrawals manually from a mutual fund can be challenging. You need to make sure that your withdrawal amount is enough to meet your lifestyle requirements, but not so high that your funds run out too soon.
That’s where an SWP calculator helps. It’s a tool that lets you try out different scenarios—based on how much you’ve invested, how much you want to withdraw, how long you want to continue, and what return you expect.
By adjusting these values, the Systematic Withdrawal Plan calculator gives you a picture of how long you can potentially sustain your withdrawals based on the withdrawal amount and the potential growth of the balance corpus with each withdrawal. In this manner, the SWP mutual fund calculator can support enhanced planning.
How does an SWP calculator work?
When you enter details like your investment amount, withdrawal plan, and expected rate of return, the calculator gives you:
- The number of withdrawals you may be able to sustain
- The potential fund value at the end of your chosen period
This helps you understand whether your current plan is sustainable or if you need to change your withdrawal amount or duration.
For a more detailed view of your estimated outcomes, you can also use this SWP return calculator to compare different return scenarios.x`
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. A Systematic Withdrawal Plan calculator automates this process and gives you estimates in seconds.
How is SWP taxed?
SWP withdrawals are treated as redemptions from the perspective of taxation. Capital gains tax applies on profits (if any) on the sale of units. The tax rate depends upon the type of scheme you have invested in – equity or debt. Below, we give you an overview of the tax structure:
Equity-oriented funds: Mutual funds that invest 65% of their corpus or more in equities are taxed as equity-oriented funds. Units held for over a year are subject to long-term capital gains tax. Capital gains of up to Rs. 1.25 lakh in a financial year are tax-exempt and the remaining amount is 12.5%. For units held for less than a year, short-term capital gains tax applies. The tax rate is 20%.
Debt funds: These are funds that invest at least 65% of their corpus in debt instruments. All redemptions are taxed as short-term capital gains regardless of your holding period. Capital gains are taxed as per your applicable income tax slab rate.
SIP, SWP, or lumpsum: Which strategy suits you?
After understanding the concept of SWP, you may be wondering how it differs from SIP and lumpsum, or which avenue is more suitable for you. The primary purpose of SIP and lumpsum is to build your corpus, while SWP is geared towards withdrawing money from it. So, in a sense, they cater to goals. Here are some considerations:
SIP (Systematic Investment Plan): This 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. It is suitable for those who want to invest in affordable and consistent instalments over time.
Lumpsum investment: This is a one-time investment, typically suited for a large amount. This can be feasible for those who have 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): This is suitable for those needing regular income. So, the strategy that may work for you 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.
Before making any decision, you can run simulations using a Systematic Withdrawal Plan calculator to get a clearer picture.
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.
All financial calculators by Bajaj Finserv AMC
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How to use Bajaj Finserv AMC SWP calculator online?
The Bajaj Finserv AMC SWP calculator is easy to use, requiring just a few simple inputs from you.
- Enter the current value of your investment
- Mention the amount you’d like to withdraw regularly
- Choose when you want your SWP to begin and how long you want it to last
- Enter the expected rate of return
Based on this information, the calculator gives you an estimate of how many withdrawals you can make, what your withdrawn amount is, and the value of your remaining investment at the end of your SWP tenure. You can change the numbers to test different possibilities and see what works for you.
You may also consider using an SWP plan calculator in parallel to fine-tune the withdrawal frequency and amount according to your investment goal.
Key benefits of SWP in mutual funds
Here are some of the key advantages that SWP offers investors:
Potential for regular income: You get fixed withdrawals at regular intervals, which can help with budgeting.
Continued investment exposure: The rest of your money stays invested and has the potential to earn returns.
Flexibility: You decide how much to withdraw and how often, based on your needs.
So, whether you’re planning for retirement or simply want to manage your cash flow better, a SWP calculator can help you structure your investment and withdrawal strategy.
Using a SWP return calculator or SWP mutual fund calculator at this stage can further help you compare outcomes and align with your expected cash flow.
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. When markets are falling, you can use an SWP return calculator to estimate how a lower expected rate of return may impact your corpus and withdrawal approach. This can help prepare you for downturns.
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. A Systematic Withdrawal Plan calculator may be used along with other tools for help in planning your withdrawals such that you stay within or close to the exemption range for LTCG.
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. However, if long-term wealth-building is your main priority, an SWP may reduce your return potential over time because of frequent withdrawals. An SWP plan calculator can be used alongside a compounding calculator to see the difference between a withdrawal-based and a reinvestment-based approach.
SWP and SIP serve different purposes: SWP withdraws funds periodically, while SIP invests steadily. SWP suits those needing regular income, whereas SIP is suitable for building wealth gradually. You can use an SWP plan calculator and an SIP calculator to compare the two approaches.
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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- Bajaj Finserv Asset Management Limited has been referred to as Bajaj Finserv AMC.
Copyright: All Rights reserved at Bajaj Finserv Asset Management Limited
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