SWP Calculator: Generate ₹50k+ Monthly Income Easily
Use our free SWP Calculator to see how you can generate a regular monthly income from your mutual fund investments. Plan your financial freedom with ease.
Balance & Withdrawals Chart
Yearly Breakdown
| Year | Opening Balance | Annual Withdrawals | Interest Earned | Closing Balance |
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Mutual Fund SWP Calculator - Plan Your Regular Withdrawals
1. How is SWP Calculated?
Unlike a lumpsum calculator, an SWP calculation is iterative. It simulates the withdrawal process month-by-month. The core principle is:
The value of your investment after each withdrawal is calculated as:Remaining Balance = Previous Balance * (1 + Monthly Rate of Return) - Monthly Withdrawal Amount
Where:
Monthly Rate of Return =
(Expected Annual Return / 12)Monthly Withdrawal Amount = The fixed amount you wish to withdraw each month.
Our SWP calculator runs this calculation for every single month of your investment tenure, giving you an accurate picture of your regular income and the remaining corpus at the end.
What is a Systematic Withdrawal Plan (SWP)?
A Systematic Withdrawal Plan (SWP) is a facility offered by mutual funds that allows you to withdraw a fixed or variable amount from your investment at regular intervals (monthly, quarterly, etc.). It’s an excellent tool for generating a predictable monthly income, especially during retirement.
How does an SWP Calculator work?
An SWP calculator works by simulating the monthly decay of your investment corpus based on your inputs: Initial Investment, Expected Annual Return, SWP Withdrawal Amount, and Investment Tenure. It shows you the monthly income you will receive and the final corpus that will remain after all withdrawals.
Is SWP better than taking dividends?
Yes, for most investors, SWP is often more tax-efficient and flexible than dividend options.
SWP: Withdrawals are considered a return of your capital. Only the gains portion of each withdrawal is taxed, and that too, after one year, as Long-Term Capital Gains (LTCG). It is more flexible as you control the withdrawal amount.
Dividends: The dividend amount is paid out of the fund’s corpus. Since April 2020, dividends are taxable in the hands of the investor at their income tax slab rate, which can be less efficient for individuals in higher tax brackets.
4. What is the main risk in an SWP?
The primary risk is market sequence risk. If the market falls significantly, especially in the early years of your SWP, your regular withdrawals will eat into the principal corpus more quickly, potentially depleting the investment faster than expected. A conservative withdrawal rate is key to mitigating this risk.
5. What is a safe SWP withdrawal rate?
A commonly cited “safe” withdrawal rate, based on historical data, is around 3-4% of the initial corpus per year. This means if you have ₹1 Crore, a safe monthly SWP would be roughly ₹25,000 to ₹33,000. Our SWP calculator helps you test different rates to find a sustainable one for your goals.
6. Can I stop or change my SWP anytime?
Yes, that’s one of the biggest advantages of an SWP. You can modify the withdrawal amount, pause it, or stop it completely at any time without any penalty. This offers tremendous flexibility to adapt to changing financial needs.
7. Is there a minimum investment for SWP?
The minimum initial investment required to start an SWP varies from fund to fund but is typically around ₹25,000 to ₹50,000. The minimum monthly withdrawal is often ₹500 or ₹1,000. You must check the specific scheme’s details for exact limits.
8. Who should invest in an SWP?
Retirees needing a stable monthly income to cover living expenses.
Individuals with a large corpus (e.g., from sale of property) who want to create a regular income stream.
Anyone seeking a tax-efficient alternative to fixed deposit interest or dividends.
Balancing SWP Withdrawals & Principal - The Core Concept
9. How to Balance Your SWP Withdrawals to Protect Your Principal
This is the most critical concept for SWP success. The balance between your withdrawals and the principal corpus determines whether your SWP will last forever or deplete quickly.
H3: The Three Scenarios of an SWP
Our SWP calculator shows you these scenarios visually, but here’s the breakdown:
Withdrawal Amount < Portfolio Growth
Situation: Your monthly withdrawal is less than the average monthly returns your portfolio generates.
Effect on Principal: Principal GROWS over time. Your corpus continues to increase even as you take out money.
Example: You have ₹1 Cr growing at 10% p.a. (~₹83,333/month). You withdraw ₹50,000/month. Your principal will grow.
Withdrawal Amount = Portfolio Growth
Situation: Your monthly withdrawal equals the average monthly returns.
Effect on Principal: Principal REMAINS STABLE. Your corpus remains the same indefinitely. This is the “sustainable withdrawal rate.”
Example: You have ₹1 Cr growing at 10% p.a. (~₹83,333/month). You withdraw ₹83,333/month. Your principal stays at ~₹1 Cr.
Withdrawal Amount > Portfolio Growth
Situation: Your monthly withdrawal is more than the average monthly returns.
Effect on Principal: Principal SHRINKS over time. You are eating into your seed capital. If this continues, the corpus will eventually be fully depleted.
Example: You have ₹1 Cr growing at 10% p.a. (~₹83,333/month). You withdraw ₹1 Lakh/month. Your principal will slowly decrease.
H3: The “Safe SWP” Formula
To protect your principal in the long run, follow this rule:
Safe Monthly SWP ≤ (Initial Corpus × Expected Annual Return) / 12
For a ₹1 Crore corpus expecting 10% return:
Safe SWP ≤ (1,00,00,000 × 0.10) / 12 = ₹83,333 per monthFor a more conservative, principal-protecting approach (3.5% rule):
Very Safe SWP = (1,00,00,000 × 0.035) / 12 = ₹29,166 per month
Our SWP calculator automatically shows you if your withdrawal rate is sustainable or if it will erode your principal over your chosen time frame.
10. How can I create a monthly income with SWP without touching my principal?
This is the dream scenario! To generate income without touching your principal, your portfolio’s annual growth must be equal to or greater than your total annual withdrawals. For example, if you have a ₹1 Crore corpus and you need ₹80,000 per month (₹9.6 Lakhs/year), your investments must consistently deliver at least 9.6% returns annually. This is challenging to guarantee, which is why most SWPs involve some principal drawdown over the long term.
11. What happens to my principal amount in an SWP?
Your principal amount is the source of your SWP payments. Each SWP installment is a mix of principal (your original capital) and capital gains (the profit). In the initial years, especially if your returns are high, withdrawals may consist mostly of gains. In a market downturn or if withdrawals are too high, a larger portion will come from the principal, reducing your future growth potential.
12. Can my SWP run out of money? How can I prevent it?
Yes, your SWP can run out of money if the withdrawal rate is too aggressive for the portfolio’s performance. This is a real risk.
To prevent it:
Use a conservative withdrawal rate (start with 3-4% of the initial corpus per year).
Choose a balanced portfolio (debt + equity) to reduce volatility.
Dynamically adjust withdrawals: Reduce your SWP amount during major market downturns.
Use our SWP calculator to test your plan over 30+ years to see if it survives poor market sequences.
13. Is the principal amount in SWP safe?
No, the principal is not “safe” like in a bank FD. It is subject to market risks. The value of your units will fluctuate with the market. The “safety” of your principal in an SWP depends entirely on your withdrawal rate and market performance. An overly aggressive SWP will erode your principal quickly, while a conservative one can help it last for decades.