SWP Calculator

How an SWP is worked out

The fund grows every month and your withdrawal is taken at the end of the month. The yearly return is turned into the monthly rate that compounds to exactly that much in 12 months:

i = (1 + r)^1/12 − 1
next balance = balance × (1 + i) − W

The most you can take each month for the money to last n months:

W = P × i ÷ (1 − (1 + i) ⁻ⁿ )

Example: ₹20,00,000 at 8% a year grows 0.643% a month. Taking ₹15,000 a month, you draw ₹36,00,000 in 20 years and still have ₹7,86,928; the money lasts 25 years 5 months in all. To make it last exactly 20 years you could take ₹16,383 a month, and up to ₹12,868 a month never touches the ₹20,00,000.

Tax on withdrawals

Each withdrawal sells units, so it is partly your own money coming back and partly gains, and tax is due only on the gains. Early withdrawals are almost all your own money: in the example, only ₹7,307 of the ₹1,80,000 taken out in the first year is gains, against ₹1,39,985 of ₹1,80,000 in year 20.

• Equity funds (at least 65% in Indian shares): gains on units held up to 12 months are taxed at 20%; after that, 12.5% on your total long-term gains above ₹1.25 lakh in a year.
• Debt funds bought from April 2023: gains are added to your income and taxed at your slab rate.

These are the rates in force since 23 July 2024; check the current rules, and other gains you have in the year, with your tax adviser.

Good to know

• Real returns rise and fall. A bad year early on hurts most, because you sell more units at low prices: many people keep a year or two of withdrawals in a liquid or debt fund.
• Withdrawing no more than a month's returns keeps the amount you invested intact.
• Some funds charge an exit load on units sold within a year; start the SWP after it ends if you can.

Questions