SWP means Systematic Withdrawal Plan. It is a convenient way to withdraw regularly, as per your future requirements. You need to fix an amount. At the time of making Lump Sum Investment in a Mutual Fund. And set up the frequency at which you would like to make the withdrawals. You can set it at monthly, quarterly, half-yearly or annually, for example. And SWP Calculator lets you use this facility as per your needs.
Suppose you invest the funds from retirement or some other Lump Sum amount you have received from some source. With SWP you will get a fixed income over a regular duration.
The Withdrawal Amount can be a Fixed amount, in some cases. depending on the Mutual Funds. And Market Returns.
What is SWP Investment
The concept of investing in SWP is exactly reverse to investing in SIP.
Under the SIP Plan, you invest at a regular interval, a regular amount of money. And Invest. On the other hand, under the SWP, you invest first and withdraw at regular intervals, a regular amount of money.
SIP Investment is buying of units from your Best Mutual Fund. In a systematic and planned manner. Whereas, SWP is redeeming units, in a systematic and planned manner.
Even, mostly, the Schemes are different. SIP investments are put into Equity Mutual Funds or ELSS Funds. Whereas, for SWP, generally Liquid Funds and Short Term Mutual Funds are preferred. Because they carry low risk. And, more often than not, people after retirement don’t have much risk appetite.
But, remember, SWP Calculator is not to be confused as Reverse SIP calculator.
SWP Mutual Fund Calculator
Using SWP Calculator, you can estimate your withdrawals from your Mutual Fund Investment over a given time duration. You just need to input some data in the calculator:
- Withdrawal Amount: This is the amount you wish to withdraw at regular intervals.
- Lump Sum Amount: The amount which you will invest in the Mutual Fund Scheme. Your Initial Investment.
- Frequency of Withdrawal: The timeframe at which you wish to withdraw your investment. As explained earlier, you can withdraw monthly, quarterly, bi-annually or annually. Generally, the calculations are done on a monthly basis.
- Rate of Returns: This is an estimated amount. It is based on the past performance of the fund.
Benefits of SWP
swp benefits: WealthBucket
An SWP can be very useful. Especially at the time of some financial exigencies. It may be retirement or unemployment.
Rupee Cost Averaging: Similar to SIP, the Rupee Cost Averaging also works to the privilege of SWP investor. During a favourable market. When the prices are at a high. The number of units you would need to sell would be less. In such a situation, your investment would remain intact.
Reinvestment: The amount received from the regular withdrawal can be re-invested. This would earn dual benefits for you. On the same investment.
Regular Income: One of the main advantages of SWP is that you can use it as a source of regular income. This is because the withdrawal amount remains constant.
Capital Appreciation: The remaining capital, after each withdrawal, generates returns. And Returns on Mutual Funds, over a period of time, have consistently proved to be better than other traditional Investment Options.
Disciplined Withdrawal: Since the time interval is pre-fixed, it prevents a completely liquid status of your money. Only a fixed amount is withdrawn. This prevents erosion of your lump sum. When we have cash in hand, we tend to spend very fast.
Pension Plan: For all those who are not in employment under government or Public Sector units (PSUs). All of us who are in private jobs or, even, private professionals. We all tend to miss out on this significant planning for our retirement. We can invest, however, in those Mutual Funds with SWP. SWP, as monthly income plan, is a good substitute for a pension.
PS: All Online Calculators have a disclaimer attached that they are illustrative only. The results are not guaranteed. They specifically ask you to take the advise of a Financial Expert.
So why not take the advice of a Financial Expert. Why not take the advice of WealthBucket? The Financial Experts in India?
Visit our website WealthBucket. Get registered to get started.
We help investors to reap benefits from the best equity fund investment, Debt mutual fund, Large Cap mutual fund or Multi-Cap mutual fund.
For a quick chat, call us at +91 9999379929. Or Email at contact@wealthbucket.in.
Do Read:
SIP calculator: How does it work
