Home » What is the difference between SIP calculator and SWP calculator?

What is the difference between SIP calculator and SWP calculator?

by M Asim

A SIP mutual fund calculator is a handy online tool designed to help investors estimate the potential returns on their mutual fund SIP investments. It allows you to calculate the future value of their investments based on investment amount, the duration of the SIP, and the expected rate of return. This tool helps investors make informed decisions by providing a clear picture of the financial outcome of their mutual fund investments.

How SIP Mutual Fund Calculator Works

Here is an overview of how a financial tool like SIP calculator works and what data an investor needs to be ready with for using the same.

Investment Amount: To use aSIP mutual fund calculator, you will need to enter the amount you intend to invest through SIP, it can be monthly, quarterly, weekly etc. The amount can be as low as Rs. 500 depending upon the scheme chosen by you.

SIP Duration: Specify the duration for which you plan invest in mutual funds throughSIP. This can vary from a few years to several decades, but not beyond 30 years, depending on your financial goals.

Expected Rate of Return: Enter the expected annual rate of return on your SIP mutual funds. It is important to base this estimate on historical performance of mutual fund schemesand your risk tolerance.

Calculate: Once you have entered these details, the SIP calculator will compute the future value of your investments.

After getting a fair understanding of the SIP and the tool to help navigate it better, let us now  get an overview on the concept of SWP.

A systematic withdrawal plan (SWP) calculator is a financial tool that helps investors plan and estimate the withdrawals they can make from their mutual fund investments, on a regular basis. SWPs are often used by individuals who wish to generate a regular income stream from their investment portfolio. Here is how an SWPcalculator works and the key factors toconsider before using the same –

1. Initial Investment: You start by entering the initial lumpsum investment amount, which represents the total sum of money you have invested in a mutual fund or a portfolio.

2. Frequency of Withdrawals: Specify how often you want to make withdrawals. Common options include monthly or quarterly, but you can withdraw it half-yearly or even annually.

3. Withdrawal Amount: Enter the amount you wish to withdraw in each instalment. The SWPmutual fund calculator will ensure this amount is withdrawn at the chosen frequency while calculating the returns.

4. Investment Duration: Indicate the total duration for which you plan to continue the SWP. This can vary depending on your income needs and financial goals.

5. Expected Rate of Return: Provide an estimate of the expected annual rate of return on your investments. It’s important to be realistic and consider the historical performance of the mutual funds in which you are invested.

6. Calculate: After entering these details, the SWP calculator will generate results that show how long your withdrawals will last, the remaining balance in your investment, and the total amount you will receive through the SWP.

In conclusion, a SWP calculator and SIP calculator are valuable tools for investors. While SIP calculator can be used for wealth accumulation estimates the SWP calculator can be used before you want to generate regular income from the accumulated investments in mutual funds. By using these calculators, individuals can gain a better understanding of how their portfolio’s performance and withdrawal frequency impact their income and wealth accumulation, ultimately helping them make more informed financial decisions.

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