A Systematic Withdrawal Plan (SWP) is a withdrawal scheme that allows investors to earn regular income from their mutual fund investments. If you have invested in a mutual fund scheme, you can instruct the fund house to redeem mutual fund units to provide you either a fixed or variable amount of money periodically, such as every month, quarter, or year. You can withdraw a fixed amount or the incurred capital gains during the period by customizing the cash flow with the fund house accordingly.

**What is SWP?**

SWP stands for Systematic Withdrawal Plan, a method of withdrawing money periodically from your mutual fund investment. You can set a fixed withdrawal amount or instruct the fund house to withdraw the capital gains from your investment. In this way, you can either earn a fixed or variable income from your mutual fund investment.

**Fixed Withdrawal on SWP**

Suppose you have invested a certain sum of money and purchased 20,000 units in a mutual fund. You opt for SWP and instruct your fund house to withdraw Rs 10,000 on the 1st of every month, starting from January 1, 2023. If the NAV of the fund is Rs 10, the fund house will redeem 1,000 units every month (10,000/10). After the first withdrawal, you will have 19,000 units left. If the NAV changes to Rs 15 on February 1, 2023, to withdraw Rs 10,000, you will redeem 666.67 units (10,000/15), leaving you with 18,333 units. This process continues, and you can calculate the remaining units or investment amount.

**Variable Withdrawal on SWP**

Variable withdrawal in SWP generally means withdrawing the incurred capital gains periodically. Suppose you have invested Rs 1 lakh in a mutual fund scheme, and its NAV increased by 2% in the first month, resulting in a gain of Rs 2,000. This capital gain of Rs 2,000 will be withdrawn from your investment.

**SWP Calculator: The Essential Tool for Investors**

Calculating returns and the remaining principal amount of SWP can be cumbersome, time-consuming, and prone to errors if done manually. Although there is a formula to calculate SWP returns, using an SWP calculator is recommended. An SWP calculator is a tool that helps you calculate the monthly withdrawals from your mutual fund investment and the total value of the investment after withdrawal.

**How to Use an SWP Calculator?**

An SWP calculator is an easy-to-use tool that requires you to enter four details to give the total investment and withdrawal amount along with the final value of the investment after all withdrawals:

**1. Total Investment: **The total invested amount in the mutual fund scheme.

**2. Withdrawal Amount (per month):**The amount you wish to withdraw every month (or quarter, year).

**3. Expected Return (annualized): **The expected rate of annual return from the mutual fund scheme.

**4. Time Period:** The time period of SWP, i.e., the number of years for which you will keep withdrawing funds monthly.

Based on these inputs, the SWP calculator will calculate and show you the following:

**-Total Investment:** Total amount invested in the mutual fund.

**- Total Withdrawal: **Total amount that you would have withdrawn during the SWP period.

**- Final Value: **Final value of your investment after subtracting the total withdrawal amount.

**How Does an SWP Calculator Work?**

An SWP calculator saves you from manual calculations by using the following formula:

A = PMT ((1+r/n)^nt – 1) / (r/n))

Where:

**- A:** Final value of investment

**- PMT**: Amount withdrawn every period

**- n:** Number of compounds in a period

**- r:** Expected annual rate of return

**- t: **Total number of periods for which the money is invested

**Example:**

Suppose you have invested Rs 2,40,000 in a mutual fund scheme and opted for an SWP of Rs 10,000 per month for 12 months, with an annual rate of return of 7%. The balance sheet might look like this:

Investment Amount after each withdrawal | Withdrawal Amount | Expected Return | Remaining Amount after each withdrawal |

Rs 2,40,000 | Rs 10,000 | Rs 1,283.2 | Rs 2,21,283.2 |

Rs 2,21,283.2 | Rs 10,000 | Rs 1174.14 | Rs 2,02,457.4 |

Rs 2,02,457.4 | Rs 10,000 | Rs 1064.2 | Rs 1,83,521.8 |

Rs 1,83,521.8 | Rs 10,000 | Rs 953.8 | Rs 1,64,475.6 |

Rs 1,64,475.6 | Rs 10,000 | Rs 842.6 | Rs 1,45,318.4 |

Rs 1,45,318.4 | Rs 10,000 | Rs 731 | Rs 1,26,049.4 |

Rs 1,26,049.4 | Rs 10,000 | Rs 618.6 | Rs 1,06,668 |

Rs 1,06,668 | Rs 10,000 | Rs 505.4 | Rs 87,173.6 |

Rs 87,173.6 | Rs 10,000 | Rs 391.8 | Rs 67,565.4 |

Rs 67,565.4 | Rs 10,000 | Rs 277.4 | Rs 47,842.8 |

Rs 47,842.8 | Rs 10,000 | Rs 162.4 | Rs 28,005.4 |

Rs 28,005.4 | Rs 10,000 | Rs 46.6 | Rs 8,052.1 |

Your final value of investment will be Rs 8,052.1.

**Benefits of Using INDmoney SWP Calculator**

Using the INDmoney SWP calculator offers several advantages:

**- Accurate Calculations:** Gauge your remaining investment amount after each withdrawal.

**- Easy Adjustments:** Change the total investment amount, withdrawal amount, expected rate of return, and time period of SWP to get different results based on the inputs.

**- Future Planning: **Shows the final value of investment after the SWP ends, allowing you to plan your future investments and finances in advance.