Systematic Withdrawal Plan Calculator

What is a Systematic Withdrawal Plan Calculator?

A Systematic Withdrawal Plan (SWP) calculator is an online tool that helps you determine the amount of money you can withdraw from your investment funds on a monthly or annual basis. Simply put, it allows you to determine the right strategy to withdraw your funds to get a profit of high returns. 

The SWP calculator takes into account the following details to provide you with an accurate estimation of your withdrawals and interest earned from your investment:

• Investment Amount

• Expected Annual Rate of Return

• Tenure of Your Investment

• Amount You Wish to Withdraw Monthly/ Yearly

It is a good idea to use this SWP calculator to check the final value because it makes the process of calculation very convenient. 

SWP calculator can be helpful for retirement planning if you want to generate a consistent income stream from your investments. 

How Does SWP Calculator Work?

A SWP calculator is a tool that helps you calculate the monthly withdrawals you can make from your investment funds through a Systematic Withdrawal Plan (SWP) .

Formula for Calculating the Withdrawal Amount in a Systematic Withdrawal Plan (SWP):

Withdrawal Amount = (A × r) / [n × {1 - (1 + r)^(-nt)}]

Where:

• A = Initial Investment Amount

• R = Expected Rate of Return

• n = Number of Annual Withdrawals

• t = Investment Tenure (in years)

The SWP calculator will provide you with the following values:

• Total Investment Amount

• Total Withdrawal Amount

• Final Value in the Fund

Illustration of Systematic Withdrawal Plan Formula Calculation

Suppose you invest Rs. 5 lakhs for a year with a monthly systematic withdrawal of Rs. 10,000. If the annual rate of interest is 10%, your monthly balance sheet for an investment period of 1 year will be as follows:

How to Use a SWP Calculator?

Follow the steps mentioned below to make judicious use of a SWP Calculator:

Step 1: Open the Policybazaar SWP calculator.

Step 2: Enter the following details:

• Amount invested

• Withdrawal amount

• Expected rate of return

• Tenure of the investment

Step 3: Click on the “Calculate” button.

Step 4: The SWP calculator will show you the following information:

• Total amount you have invested

• Total amount you will withdraw during the tenure of the investment

• Final Value of your investment

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What are the Benefits of SWP Calculator?

There are several benefits to using an SWP calculator; some of them are as follows:

• Determine the Optimal Withdrawal Amount: A SWP calculator can help you determine the maximum amount you can withdraw from your investment each year without running out of money. This is important to ensure that you have enough money to meet your financial needs throughout your retirement.

• Stay Disciplined in Your Withdrawals: It can be tempting to withdraw more money from your investment during market volatility. However, this can be risky, as you may end up running out of money prematurely. An SWP calculator can help you stay disciplined and stick to your withdrawal plan, even when the market is down.

• Calculate the Final Value of Your Investment: An SWP calculator can help you calculate the final value of your investment, taking into account your withdrawal amount, the rate of return, and the inflation rate. This will give you an idea of how much money you will have left after you have made all of your withdrawals.

• Compare Different Withdrawal Strategies: There are different withdrawal strategies that you can choose from, each with its own advantages and disadvantages. An SWP calculator can help you compare different strategies and choose the one that is right for you.

To Sum It Up

The SWP Calculator is a valuable tool that enables you to make informed and judicious decisions about your Systematic Withdrawal Plans (SWP). By providing the required financial information, you can estimate your withdrawal amounts, monitor investment balances, and tailor your SWP strategy to meet your specific needs and goals.