What is a Systematic Withdrawal Plan (SWP)?

A Systematic Withdrawal Plan (SWP) is an investment strategy that allows you to withdraw a fixed amount of money regularly from your mutual fund investments. This method helps you create a steady flow of income, making it a great option for retirees or anyone needing consistent payouts.

SWP Formula:

The amount you can withdraw is influenced by factors like:

​Withdrawal Amount = Invested Amount×Expected Rate of Return​ ÷ Duration (in months)

Example:

Suppose you have invested ₹10,00,000 in a mutual fund with an expected return of 8% annually. You wish to withdraw money over 5 years (60 months). Using the SWP strategy, you can regularly withdraw funds, ensuring you maintain a balance between your withdrawals and the returns.

Benefits of Using SWP:

1. Consistent Income: Ideal for retirees or individuals looking for regular payouts.
2. Tax-Efficient: Only the portion of the withdrawal considered as capital gains may be taxed, offering a more tax-efficient solution compared to other investment options.
3. Flexibility: You can control the amount you withdraw, and even pause or modify the plan as per your needs.

Why Use an SWP Calculator?

Manually calculating how much you can withdraw while ensuring your investment continues to grow can be tricky. An SWP Calculator provides a quick and accurate result, showing the monthly or annual withdrawals based on your invested amount, duration, and expected rate of return.