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What is SWP?

A Systematic Withdrawal Plan (SWP) performance calculator is a tool that helps you estimate the future value of your investments and the viability of your withdrawal plan. It takes into account various factors like the initial investment amount, withdrawal frequency and amount, expected rate of return on the investment, and the investment tenure.

Here’s what you can expect from an SWP performance calculator:

Inputs:

  • Initial investment amount: This is the total amount you invest in the chosen mutual fund scheme.
  • Withdrawal frequency: Choose how often you want to withdraw funds (monthly, quarterly, etc.).
  • Withdrawal amount: Enter the fixed amount you plan to withdraw each time.
  • Expected rate of return: This is the average annual return you expect from the underlying investment.
  • Investment tenure: Specify the duration of your SWP plan (in years).

Outputs:

  • Future value of the investment: The calculator estimates the remaining corpus in your investment after considering all withdrawals.
  • Chart of corpus and withdrawals: This provides a visual representation of how your investment corpus declines and the total withdrawn amount over the tenure.
  • Breakeven point: This indicates the time at which your withdrawals equal the corpus, highlighting the sustainability of your plan.
  • Tax implications: Some calculators may estimate the potential capital gains tax you might incur due to withdrawals.

Benefits of using an SWP performance calculator:

  • Planning and forecasting: Understand the potential impact of your SWP plan on your future corpus and income.
  • Optimizing withdrawals: Adjust the withdrawal frequency or amount to ensure your corpus lasts throughout your desired tenure.
  • Risk assessment: Gauge the feasibility of your plan and potentially identify over-dependence on withdrawals.
  • Informed decision-making: Use the insights to make informed choices about your investment and retirement planning.

Limitations of SWP performance calculators:

  • Market volatility: The calculations are based on estimated returns, and actual market performance may deviate from projections.
  • Tax complexities: The tax calculations might be simplified and may not include all applicable charges.
  • Individual factors: The calculator doesn’t take into account personal financial circumstances like inflation or other income sources.
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