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Next toolsAssumptions and methodology
Transparent calculation notes for SWP Calculator.
Formula used
Each month the corpus earns the annual return divided by 12 (10% a year compounds to about 10.47%), then that month's withdrawal is taken. The corpus compounds the same way during any hold.
Methodology
- Compound the corpus monthly during any hold period.
- In each withdrawal month, credit growth first, then take the withdrawal.
- At the end of the plan, check whether the corpus can pay every future withdrawal at the expected return. If it can't, continue month by month to find when the money runs out.
Core assumptions
- Monthly return = annual return ÷ 12, as most Indian SWP calculators use (10% a year compounds to about 10.47%).
- Each withdrawal is taken at the end of the month: from the first month, or from the month after the hold ends when there is one.
- With inflation on, the withdrawal rises once every 12 months.
- “Money lasts” (or “Income lasts” when there is a hold) counts from the first withdrawal; the hold is shown separately.
- Return is constant, and tax applies only with Advanced options on: the gain part of each withdrawal is taxed by fund type and financial year (April to March), with 4% cess.
Not included
- Tax assumes a single lump-sum purchase, resident individual, no other equity gains unless you lower the exemption, and ignores surcharge and rebates.
- Sequence-of-returns risk, exit loads, expense ratio, and irregular withdrawals are simplified.
- SWP sustainability can change quickly in real market conditions.
About SWP Calculator
Guide1What is SWP (Systematic Withdrawal Plan)?
A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investment at regular intervals. It is essentially the reverse of a SIP — instead of investing periodically, you redeem periodically from an existing corpus.
SWP is popular among retirees and individuals seeking regular income from their investments while keeping the remaining corpus invested for potential growth.
2How SWP Works
When you set up an SWP, mutual fund units are redeemed each month (or at your chosen frequency) to provide you the withdrawal amount. The remaining units continue to earn returns based on the fund's performance.
- Units redeemed: Only enough units to cover your withdrawal are sold each period
- Remaining corpus: Continues to be invested and can grow
- Flexible frequency: Monthly, quarterly, or semi-annual withdrawals
3SWP Formula
The remaining corpus after each withdrawal is calculated as:
Remaining = Previous Balance × (1 + r) - W
- r = Monthly rate of return: the annual return ÷ 12 (10% a year ≈ 10.47% compounded)
- W = Withdrawal for the month, which rises once every 12 months when it is linked to inflation
The corpus lasts indefinitely only if it can fund every future withdrawal, including the inflation rises, at the expected return. Otherwise it runs out, and the calculator shows the month it does.
4How to Use This SWP Calculator
- Step 1: Enter your total investment corpus (e.g., ₹50,00,000)
- Step 2: Specify the monthly withdrawal amount you need (e.g., ₹30,000)
- Step 3: Set the expected annual return on the remaining investment
- Step 4: View how long your money lasts, what is left at the end and the total withdrawn, then follow the corpus balance year by year in the chart and the schedule
5Benefits of Using SWP
- Regular Income: Provides a steady cash flow similar to a pension
- Tax Efficiency: Only the capital gains portion of each withdrawal is taxable, not the full amount
- Corpus Growth: Remaining investment continues to earn returns
- Flexibility: Adjust withdrawal amounts or stop at any time