What this calculator does
A Systematic Withdrawal Plan (SWP) allows mutual fund investors to redeem a predetermined sum periodically (e.g. monthly) while the remaining capital remains invested to earn market returns.
Formula & Mathematical Logic
Monthly Balance = (Opening Balance × (1 + r/1200)) − Monthly Withdrawal
Initial investment capital, monthly withdrawal sum, expected portfolio return %, and withdrawal horizon in years.
How WealthAura calculates this
Each month, the portfolio generates return on the remaining capital balance, after which the requested monthly withdrawal is subtracted. The simulation tracks longevity until depletion or target horizon.
Worked example
Investing ₹20,00,000 in a balanced hybrid mutual fund earning an assumed 8.5% return while withdrawing ₹15,000/month leaves over ₹21.5 Lakh remaining balance after 10 years, having paid out ₹18 Lakh in cash flow.
Input sensitivity & what changes
Withdrawing 6% to 7% annually often allows the capital to grow or remain stable in moderate-return portfolios, whereas an aggressive 10%+ withdrawal rate can deplete principal rapidly.
How to interpret the result
Assesses sustainable withdrawal rates for retirees and generates predictable monthly income without selling entire fund holdings.
Key factors that influence the outcome
Sequence of returns risk, market drawdowns, equity vs hybrid asset allocation, and capital gains taxation under Section 112A.
Common calculation mistakes to avoid
Withdrawing more than the sustainable portfolio growth rate during severe market downturns.
Underlying assumptions & legal caveats
Smooth, uniform monthly return and regular month-end cash redemptions.
Read the related guide →