In order to plan your financial goals, you need clarity on how much you can accumulate through your investment over time and how much you can withdraw. An SWP calculator and a SIP return calculator can help you get this clarity to make your financial planning more effective.
What is SWP?
A Systematic Withdrawal Plan is a plan to withdraw funds from a mutual fund where you have already accumulated some amount. The amount of withdrawal and frequency of withdrawal is decided by you at the time of applying for the SWP. To withdraw funds, units of the mutual funds are redeemed at the existing NAV on the date of withdrawal. So when the NAV is low, more units are redeemed to provide the SWP amount. The amount remaining in the SWP fund continues earning returns. Care must be taken to make sure that the amount of withdrawal does not deplete the corpus left in the SWP account before the time for which you want the fixed income. The amount of withdrawal can be decided using an SWP calculator. An SWP is just the opposite of an SIP.
What is SIP?
In an SIP, a fixed sum of money is invested on fixed dates to buy units of a mutual fund. The SIP is a convenient way of investing into a mutual fund and enjoys the returns from the power of compounding that has the potential to build sizable wealth in the long term. Since SIP is done regularly at fixed intervals, you do not need to time the market for your investment as rupee cost averaging helps to balance out the effect of market highs and lows in your portfolio. Apert from the mentioned benefits, you also get to own a diversified portfolio that is managed by a professional fund manager. The returns you can expect from your SIP can be easily calculated using an SIP return calculator.
How can calculators help you with your financial plans?
Before you start your investment, you can use a free online SIP return calculator to understand two things. There is a type of calculator that gives results on how much you can accumulate with your SIP investment over a period of time. The other type of SIP return calculator tells you how much you need to invest in SIP to create the target corpus. Both types of calculators are excellent tools to plan your investments.
Once you have accumulated the corpus for the goal that you were investing in, you would want to withdraw the money. Instead of withdrawing the entire money at once, it is best to use an SWP and use a SWP calculator to determine how much you can withdraw without depleting the entire corpus. The returns on the remaining amount in your SWP account should be more than the rate at which you withdraw. Similar to the SIP calculator, the SWP calculator is also freely available online and you can utilize it to plan your withdrawal of funds.
Contact a mutual fund distributor or a financial planner and talk about the mutual fund you should invest in as SIP and how you can use the SWP feature to withdraw funds.
