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Best SWP Plan in Mutual Fund in 2024 for Monthly Income
SWP is the acronym for Systematic Withdrawal Plan. It is an investment strategy where you can withdraw a fixed amount from your mutual fund investments at regular intervals. You can use an SWP calculator to calculate how much you should withdraw and what income you can expect from your investments in the long run.
This plan comes in handy for those who are looking for an alternative steady income source along with their primary source of income. SWP is popular among retirees or anyone who wants to convert their investments into cash flow.
In this article, find out what a SWP calculator is, how it works, and how it can help you plan your financials for the future.
How Does a SWP Calculator Work?
A SWP calculator is a digital tool that gives you a number that you can withdraw from your investments while maintaining funds. Now, this number might not be wholly accurate but it will give you an estimate depending on your invested amount, expected returns, and your frequency to withdraw.
The RWR SWP Calculator requires the following information:
- Investment Amount - Here you need to fill in the total amount that you have invested in the mutual fund.
- Monthly Withdrawal Amount - This is the fixed amount of money that you wish to withdraw at regular intervals.
- Expected Annual Return - Provide the expected annual return on investment. You can easily calculate this by looking at the past performance of the mutual fund.
- SWP Duration - This is the total time that you plan to keep withdrawing money. Just give an estimate in years.
- Step-up Percentage - A step-up is the percentage by which you plan to increase your monthly withdrawal amount each year. It is only fair that your income matches the rising inflation rate.
Let’s take an example:
Suppose your investment amount is Rs.15,00,000 and you decide to withdraw Rs.10,000 per month with an expected annual return of 8%. You want to continue this for 5 years with a step up of 5% every year.
At the end of 5 years, you would have withdrawn Rs.66,30,075.75 from your invested amount and would still have Rs.14,23,670.52 remaining in your account.
Benefits of Using a SWP Calculator
Now, that we know how the SWP calculator works, let us look at some of its major benefits:
Financial Planning
With the help of the SWP calculator, you understand how much you can withdraw easily while keeping your funds intact. This way, you can plan your finances and make intelligent decisions about your expenses.
Income Management
The SWP calculator offers a sort of flexibility in managing your finances. You can adjust your withdrawal amounts and the step-up percentage based on your needs. This will help you give a close estimate of your remaining amount in the mutual fund.
Save More Tax
Money that is withdrawn from SWP is made up of Capital and Income. You will be glad to know that no tax is applied to the capital portion. You are liable to pay taxes applied on the income portion only.
Replaces Your Pension
Pension is a great scheme for government employees that makes them less worried about their old age. But what happens when you are not a government employee? This is where SWP comes into play, it is an amazing way to grow your money and secure your retirement.
Things to Keep In Mind
As we said before, the SWP calculator provides you only with an estimate of your numbers. This is because there are several factors at play:
Market Conditions
The performance of your mutual funds depends on the market conditions. This means that it is important to keep checking your investments and altering your investment and withdrawal strategy accordingly.
Inflation
Inflation is bound to happen with time with a direct effect on the purchasing power of your withdrawals. Research thoroughly and always factor in inflation when you plan your withdrawals.
Investment Amount
Your invested amount plays an important role in determining whether your withdrawal amount will be supported by it or not. If you plan to make withdrawals for a longer period, make sure that your investment amount and mutual fund are solid enough.
Wrapping Up
An SWP calculator is an amazing tool that will help you manage your money. By understanding how to use the calculator, its benefits, and the factors involved, you can easily make an informed decision about your financial goals.
So, whether you are planning for retirement, funding a vacation, or just simply looking to manage your finances, the RWR SWP calculator will help you as it comes with an exclusive step-up feature!
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