# A Detailed Guide To The SWP Calculator’s Uses & Benefits

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If you have invested in mutual funds in a lump sum, you must have heard about SWP (Systematic withdrawal plan). Simply put, SWP allows investors to withdraw a fixed or variable amount at a predetermined frequency from their mutual fund investments (the remaining investment amount continues to generate interest). An SWP offers investors enough liquidity to access their money based on their needs and yet allows them to meet their financial goals in a specific timeline.

Having that said, a higher withdrawal rate can cause a capital & interest loss from investments. A higher capital loss hampers investment planning, and ultimately the goals remain unrealized. So, how to decide the limit of money that one can withdraw without spoiling their financial planning? It’s through the SWP calculator.

What is an SWP calculator?

An SWP calculator is an online tool that allows investors to perform rapid calculations related to systematic withdrawal plans. It requires a few inputs from the users to show valuable information, such as the total investment, the final value of the investment, and the withdrawal amount, and help them choose an appropriate SWP plan for themselves.

How does an SWP calculator work?

A typical SWP calculator works through a simple formula,

F = WAMT ((1+r/n)^nt – 1) / (r/n))

Herein, each element represents a different entity and meaning.

F: Final Value of investment at the end of the tenure

WAMT: Withdrawal amount for each period

r: expected rate of interest

n: number of compounding in the specified period

t: number of times the amount has been invested

Let’s take an example and try to understand the SWP calculations:

Assume you have invested Rs 4,00,000 in a mutual fund scheme and opted for an SWP for 12 months with an SWP amount of Rs 5,000 per month. The expected rate of return here is 8%. As per the example and after performing the manual calculations, you get the final value of your investments as Rs 3,69,831. If you go by the manual calculations, you have to use the above formula 12 times until you reach the final investment value. Following such a process can be time-consuming and prone to errors. With an online SWP calculator, you can simplify the task in a few simple steps and get additional benefits that we shall discuss further.

So, how to use an online SWP calculator?

Follow the below-mentioned steps for using the SWP calculator from the Glide invest.

• Visit the Glide Invest website or download the app, and under section tools, select financial calculators, then click on SWP calculator.
• Once redirected to the SWP calculator, select the lump sum amount you want to invest. You can select an amount up to Rs. 50,00,000.
• Now select the withdrawal amount you wish to receive from your mutual fund investments. You can choose the amount within the range of 1000-50000.
• Further, select the investment period for which you want to or should stay invested in mutual funds so you can realize the expected returns. For this, a 1-20 year time frame is available in the tool for you to choose from.
• Lastly, select the expected rate of return the fund scheme is offering.

Once you select or enter all the values, the SWP calculator will generate results for you accordingly in the form of numerical data, such as,

• Total Investment amount would need to realize your goals
• Total Withdrawal amount that you can withdraw during your chosen SWP period
• The final value of your investment, excluding the total withdrawal amount at the end of the tenure.

Suppose you wish to invest in a mutual fund scheme through SWP. You start your investment with a lump sum amount of Rs 5,00,000 and opt for a withdrawal of Rs 10,000 per month with a tenure of 5 years and an expected rate of return of 10%. When you enter the values on the SWP calculator, you will get a result indicating the corpus you will make at the end of the tenure with the total investment and withdrawal amount. In this case, you will generate an estimated maturity amount of Rs 39,643 with a withdrawal amount of Rs 6,00,000.