## What is SWP?

The Systematic Withdrawal Plan or SWP offers investors a regular income and returns money that is left in the scheme. You may withdraw a fixed or a variable amount on a pre-decided date every month, quarter, or year. You may customise cash flows to withdraw, either a fixed amount or the capital gains on the investment. For example, you have 8,000 units in a mutual fund scheme. You have specified a set of instructions to the mutual fund house where you seek to withdraw Rs 5,000 every month through the Systematic Withdrawal Plan. On January 01, 2020, the NAV of the scheme was Rs 10. You would get an equivalent number of mutual fund units = Rs 5,000/10 = 500 units. The mutual fund house would redeem 500 units and give you an amount of Rs 5,000. You still have 7,500 units left in the mutual fund scheme. Now on February 01, 2020, the NAV of the mutual fund scheme increased to Rs 15. The equivalent units of the mutual fund scheme are Rs 5,000/ Rs 15 = 333 units. The mutual fund house would redeem 333 units and give you Rs 5,000 for the month of February. You are left with 7500 units – 333 units or 7167 units. You may continue the calculations in a similar manner for the following months.

## What is the SWP Calculator?

The SWP Calculator is a simulation that shows you the monthly withdrawals from your mutual fund investments. It shows the total value of the mutual fund investment after the withdrawal. You may be able to get a regular income in retirement through the systematic withdrawal plan. The SWP Calculator consists of a formula box, where you enter the total investment amount, withdrawal per month, the expected annual rate of return, and the tenure of the investment. The SWP Calculator shows you the future value of your mutual fund investments.

## How does SWP Calculators work?

The SWP Calculator shows you the regular cash flows through the systematic withdrawal plan. You must use the mathematical formula: A = PMT ((1+r/n)^nt – 1) / (r/n)) A = Future Value of the Investment PMT = Payment amount for each period n = number of compounds in a period t = number of periods the money is invested For example, you have an initial investment of Rs 1,20,000 in a mutual fund scheme. You redeem an SWP amount of Rs 10,000 per month. You have a withdrawal tenure of 12 months. Expected annual return is 7%. MonthBalance at the beginning of the month (Rs)Redemption Amount (Rs)Interest (Rs)Balance at the end of the month (Rs
 1 120000 10000 641.667 110642 2 110642 10000 587.076 101229 3 101229 10000 532.168 91760.9 4 91760.9 10000 476.939 82237.8 5 82237.8 10000 421.387 72659.2 6 72659.2 10000 365.512 63024.7 7 63024.7 10000 309.311 53334.1 8 53334.1 10000 252.782 43586.8 9 43586.8 10000 195.923 33782.8 10 33782.8 10000 138.733 23921.5 11 23921.5 10000 81.2087 14002.7 12 14002.7 10000 23.3491 4026.06
You have a future value of Rs 4,026 as shown in the table.

## How to use the ClearTax SWP Calculator?

The ClearTax SWP Calculator helps you to calculate the SWP mutual fund investment over a tenure. To use the ClearTax SWP Calculator:
• You must fill in the total investment amount in mutual funds.
• Enter the withdrawal per month from the mutual fund scheme
• You must fill in the expected rate of return.
• You then enter the tenure of the investment in years.
• The ClearTax SWP Calculator will show you the total investment, total withdrawal, total interest earned, and the final value of the investment.

## Benefits of ClearTax SWP Calculator

• You may use the ClearTax SWP Calculator to calculate the monthly income from mutual fund investments, through the Systematic Withdrawal Plan.
• You can try the ClearTax SWP Calculator for different withdrawal amounts and calculate the maturity amount.
• The calculator helps you identify the best monthly withdrawals from the mutual fund scheme.
• The ClearTax SWP Calculator helps you determine the SWP surplus, which you may invest in other financial instruments.