Regular investors in mutual funds know the advantages you get when you invest in these financial instruments. For those retail investors for whom direct equity proves too risky, mutual funds may offer solutions and benefits from investment. They are good for small investors who want to just test the waters of the stock markets, as well as for seniors who wish to grow some wealth they have to spare. Needless to say, mutual fund investment is very popular with all kinds of investors of the current age.
A method by which you can invest in mutual funds comes with a systematic withdrawal plan (SWP). You may use an SWP calculator to find out if such a plan would benefit you before signing up for it. However, before you take any steps to use the calculator, you should be well aware of what an SWP entails and understand how a calculator for SWP helps you plan better.
A Systematic Investment Plan
Nowadays, whether you invest in a traditional fixed deposit or recurring deposit, or go in for any latest investment vehicle like a SIP or an SWP, there is an online calculator that helps you plan your investment. Regarding an SWP, you can find an online SWP calculator to know about returns you can expect depending on the parameters of amounts invested and the mutual funds you choose. An online digital tool takes the stress that comes with manual calculations away, and helps you reach more accurate estimates. Therefore, it is a good idea to use an online calculator for an SWP. Nonetheless, to fully understand the use of this digital tool, you should know what a systematic withdrawal plan is in the first place.
A systematic withdrawal plan is a method of investment in a mutual fund. Within the mechanism of a systematic withdrawal plan, or an SWP, you can invest in a mutual fund of your choice. The mutual fund you invest in will depend on your individual investment goals and your financial requirement based on your goals. As you may already know, traditional mutual funds require you to invest a lump sum in a fund that invests in equities, debt, or both.
With an SWP, you can sign up for any mutual fund that meets your financial requirements, and then fix an amount that you can withdraw on a regular basis. You can also opt for different frequencies of withdrawals, say monthly, quarterly or yearly. Therefore, an SWP is great for those investors who would like their investments to have a chance to grow, as well as give them a regular source of income to meet periodic expenses. As a result, you may need to make certain calculations to know how much you should invest to get the returns you need. This is where an SWP calculator can help you immensely.
How the SWP Calculator Can Assist You
According to the concept of a systematic withdrawal plan, investors have to invest a specific amount (as a lump sum) and make withdrawals of fixed amounts at frequent intervals as determined by the plan. When each withdrawal is made, the said amount will automatically be deducted from the corpus, but this continues to collect interest.
It may be a challenge to precisely make calculations of monthly withdrawals and compute the full matured amount you are potentially able to receive. These complex calculations can be executed very easily with an online device like a calculator for an SWP. The SWP calculator conveniently and accurately calculates your sum of maturity based on the monthly (or any other periodic) withdrawals you may make. Calculators are precise as there is no room for human error, and aid you in the planning stages of your investment in a systematic withdrawal plan. An SWP permits an investor to generate a monthly income and an accumulated amount (from interest earned) at the time when the plan matures. With an SWP calculator, it is possible for you to get a rough estimate of your maturity amount.
Here is an example of how a given SWP works and the calculation that an SWP calculator helps you to make:
If an individual has invested an amount of Rs. 50,000 for a 12-month term with an SWP, and a regular monthly withdrawal of Rs. 1,000 at an interest rate of 10%, then the accumulated interest at maturity will amount to Rs. 4,565. This maturity amount is a total of 12 months of collected interest. This is what an SWP calculator will help you to compute, on a monthly basis, or for any interval you choose for your payouts.
How to Use the Online SWP Calculator
You can find an online calculator on the website or app of any asset management company (AMC) or bank that deals with mutual fund investment via an SWP. The calculator is fairly simple to use, and if you go to any home page, you may have to locate sections to find the calculator, based on the portal you are at. Alternatively, under the section on “mutual funds”, you may find ways to invest and if you see “SWP” you can click on this.
Furthermore, you may see “Online calculators” and you will be able to find the calculator here. As different platforms have varied ways of labeling, you will have to locate the calculator. When you do find it, the SWP calculator is fairly uniform at all platforms, and you will have to enter details such as the tenure of investment, your expected return on investment (in terms of potential interest rate based on past fund data), and the amount invested. Then, all you have to do is click on “enter” or “submit” to find out your values.
Simple Ways to Invest
Investment has become easier than it was in previous times. Investment should be encouraged and there are different ways in which to invest and grow your wealth according to your unique needs. Online tools only make life easier and you have very few excuses not to invest sensibly and build your capital.