SWP Calculator

A Systematic Withdrawal Plan (SWP) allows you to receive regular returns from your investment, rather than waiting until it matures. With an SWP, you can choose to withdraw a fixed or variable amount on a set date - whether monthly, quarterly or yearly - while the remaining balance stays invested. To easily calculate the total value of your investment, there are systematic withdrawal plan calculators.

What is an SWP calculator?

An SWP calculator lets you evaluate the interest and final amount of the scheme based on your total contribution. The contribution you make is on a periodic basis. The number of units in the mutual fund scheme decreases as you pull out funds.

How does Kotak811 SWP calculator work?

Our SWP calculator helps you understand how much money you'll receive regularly from your investment over time. It shows how your money grows and how much is withdrawn each period.

The formula used for calculating SWP looks like this:

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

Here's what each term means:

A = The total amount of money you'll have at the end.
PMT = The amount you withdraw each time.
r = The interest rate.
n = How often the interest is calculated in a year
t = How long your money is invested.

For example, let's say:
You invest ₹5,00,000 in a mutual fund for 1 year.
You plan to withdraw ₹5,000 every month.
The expected annual return is 7%.

Each month, you'll see:

• How much money is in your account at the start.
• The withdrawal amount.
• Subtract 1 from the result = 2.30039
• The interest added to your balance
• Your balance at the end of the month after the withdrawal.

The calculator helps you track your cash flows and plan your withdrawals better. So, you can easily manage your money if you are considering investing in this scheme.

Note: The values in the table have been rounded off to the nearest whole number for simplicity and ease of understanding. Actual values may vary slightly due to the precision of interest calculations.

How to use Kotak811 SWP calculator?

The Kotak811 SWP calculator is an easy-to-use tool that helps you plan your systematic withdrawals from mutual fund investments. To make the most of it, follow these simple steps:

1. Enter your investment amount

Input the total amount you want to invest in the mutual fund. This is your starting capital, which the calculator will use to determine how your investment will grow over time.

2. Set the expected return rate

Estimate the annual rate of return you expect from your mutual fund. This is usually based on past performance or your financial advisor's suggestions. The calculator will consider this rate to predict how much interest your investment will earn.

3. Choose your monthly withdrawal amount

Enter the fixed amount you'd like to withdraw regularly. This can be a set amount for expenses or savings goals.

4. Select the withdrawal duration

Decide the period over which you want to receive the withdrawals. It could be for a year, five years, or even longer. This helps you manage your cash flow over the chosen period.

Once you input all these details, the calculator will show you the expected cash flow, including interest earned and the balance remaining after each withdrawal. This way, you can plan your financial future with more confidence and ease.

What are the benefits of using SWP calculators?

Using the best SWP calculator offers several key benefits in the following ways:

Planning your monthly income

An SWP calculator allows you to set regular withdrawals from your mutual fund investments, providing a reliable and consistent income source. This is particularly helpful for retirees or anyone seeking a fixed monthly cash flow without the uncertainty of market fluctuations.

Adjusting for changing financial needs

The calculator lets you customise your withdrawal plan by adjusting the amount, frequency, and duration of withdrawals. This helps you tailor your plan according to your financial needs, whether you want monthly, quarterly, or annual withdrawals.

Maximising tax efficiency

SWP withdrawals may offer tax benefits, as long-term capital gains are taxed favourably, as compared to regular income options. The calculator helps you plan your withdrawals to optimise tax efficiency.

Protecting your investments for long-term growth

Unlike withdrawing all your funds at once, the calculator helps you withdraw systematically, leaving a portion of your investment to continue growing. This approach balances your income needs with long-term capital appreciation.

FAQs 

1. Is SWP good for retirement? 

Yes, an SWP investment is considered a good option for retirement. It gives you a steady and predictable income stream, which is especially beneficial for retirees who need a regular cash flow to meet their living expenses. Unlike a regular withdrawal, where one is likely to withdraw a huge portion of the lump sum, thus eradicating the invested amount, the withdrawal is systematic. Also, a feature of SWPs is that the retiree can exercise control over the amount and frequency of withdrawal, thus meeting his/her needs. 

2. Is SWP tax-free? 

No, SWPs are not entirely tax-free. The tax factor is based on the category of the mutual fund, either equity or debt and the period of holding. In equity-oriented funds, long-term capital gains (LTCG) that are up to ₹1,00,000 in a financial year are tax-free and LTCG above ₹1,00,000 is taxed at 10%. As for debt-oriented funds, the gains are taxed depending on whether they are short-term or long-term capital gains. In the case the investment is held for more than three years, the gains are considered long-term and attract a tax rate of 20% after taking into account indexation benefits. 

3. What is the eligibility for SWP? 

An SWP (Systematic Withdrawal Plan) is ideal for: 

Risk-averse investors: Those who prefer capital protection can invest in low-risk funds and withdraw only the capital gains. 

Retirees without a pension: They can create a personal pension by investing their corpus in mutual funds and withdrawing regularly. 

High-tax bracket individuals: SWPs help reduce tax burden with no TDS on capital gains.