SWP Calculator
Edata Special
SWP Calculator: How to Get a Regular Monthly Income from Your Investments?
Are you looking for a way to get a fixed monthly income from your mutual fund investments? If yes, then SWP (Systematic Withdrawal Plan) is the best tool for you. Many people know about SIP (for investing), but very few understand the power of SWP (for withdrawing).
In this guide, we will explain what an SWP calculator is and how it can help you plan your retirement or monthly expenses.
What is an SWP (Systematic Withdrawal Plan)?
SWP stands for Systematic Withdrawal Plan. It is a facility provided by mutual funds that allows you to withdraw a fixed amount of money at regular intervals (monthly, quarterly, or yearly) from your existing investment.
While your money is being withdrawn, the remaining balance continues to stay invested in the market and keeps growing.
How does an SWP Calculator work?
An SWP Calculator helps you calculate three main things:
- How long your total investment will last.
- How much final balance will be left after all withdrawals.
- The total profit you will earn during the withdrawal period.
Benefits of Using an SWP
- Regular Income: Best for retired people or anyone looking for a “second salary.”
- Tax Efficiency: SWP is often more tax-efficient than traditional bank FDs (Fixed Deposits).
- Capital Growth: Your remaining money continues to earn returns, which helps in fighting inflation.
- Flexibility: You can stop, increase, or decrease the withdrawal amount anytime.
SWP vs. SIP: What is the difference?
1. Who should use an SWP?
SWP is ideal for retirees who need a fixed monthly pension. It is also good for people who have a large sum of money (Lumpsum) and want to use it slowly for their needs.
2. Is SWP better than a Fixed Deposit (FD)?
In many cases, yes. Mutual fund returns in the long term are usually higher than FD interest rates. Also, in SWP, you only pay tax on the profit part of the withdrawal, not the whole amount.
3. Can I lose money in an SWP?
Since the money is invested in mutual funds, it is subject to market risk. If the market falls heavily, your capital may reduce faster. It is always better to choose Debt or Hybrid funds for SWP to keep it safe.
4. How much can I withdraw monthly?
A safe rule is the “6% to 8% Rule.” For example, if you have ₹10 Lakhs, try to withdraw only ₹5,000 to ₹6,000 per month so that your main capital stays safe and grows.
5. Are there any charges for SWP?
Most mutual funds do not charge for SWP, but you should check the Exit Load of your fund. If you withdraw within 1 year, a small fee might apply.
Conclusion
An SWP Calculator is a must-have tool for smart financial planning. It gives you the freedom to enjoy your hard-earned money while keeping the investment alive. Before starting an SWP, always check your risk capacity and consult a financial advisor.