SWP (Systematic Withdrawal Plan) Calculator
A Systematic Withdrawal Plan (SWP) allows you to redeem a fixed amount regularly from your mutual fund investments while the remaining balance continues compounding.
How it works
When you initiate an SWP, units equivalent to your chosen monthly withdrawal amount are redeemed every month. The remaining units continue to participate in market growth. If your withdrawal rate is lower than the scheme's return rate, your principal balance can continue to grow over time.
Formula
B_t = B_t-1 × (1 + r_monthly) - W
Each month your remaining investment earns interest/returns, after which your fixed monthly payout is withdrawn.
| Symbol | Variable | Unit | Description |
|---|---|---|---|
| B_t | Balance at end of month t | ₹ | |
| r_monthly | Monthly return rate (Annual Return / 12) | decimal | |
| W | Monthly withdrawal amount | ₹ |
Worked example
₹10 Lakh investment, ₹8,000 monthly withdrawal at 9% return for 10 years
- Initial Investment:
- ₹10,00,000
- Monthly Withdrawal:
- ₹8,000
- Annual Return:
- 9%
- Tenure:
- 10 years (120 months)
Total withdrawn across 10 years = ₹8,000 × 120 = ₹9,60,000. Because the portfolio earned 9% annual returns on remaining balances, the final remaining corpus is approximately ₹8,74,186, yielding a total gain of ₹8,34,186.
Limitations
Mutual fund returns fluctuate with market conditions and are not guaranteed like bank fixed deposits.
Frequently asked questions
Is SWP better than dividend payout option in mutual funds?
Yes, SWP is generally much more tax-efficient than dividend plans (IDCW). With SWP, only the capital gains component of the redeemed amount is taxed, whereas dividends are taxed at your marginal income tax slab rate.
Can an SWP run forever without exhausting money?
If your annual withdrawal percentage is comfortably below your fund's long-term annual return (for example, withdrawing 6% from a fund delivering 10-12%), your capital can last indefinitely and grow over time.
What happens if the market drops during my SWP?
During market downturns, more mutual fund units are redeemed to meet your fixed cash withdrawal. Having a debt fund buffer (e.g. 1-2 years of expenses in liquid/short duration funds) helps avoid selling equity units during market dips.
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Last reviewed: 2026-08-22.