SWP Calculator: Can a ₹1 Lakh Lump Sum Investment Give You ₹10,500 Monthly for 25 Years?

Many people hesitate to start investing because they believe small amounts won’t make a big difference. But even a modest initial investment can grow significantly over time with consistent efforts and smart strategies.

By combining a lump sum investment in mutual funds with a systematic withdrawal plan (SWP), investors can create a steady monthly income stream that lasts for decades. Here’s how it works.

Initial Investment and Growth

Let’s start by understanding how a one-time investment of ₹1 lakh can grow over time with equity mutual fund returns. When you plug the numbers into a Lump Sum calculator, here's what you get:

• Investment: ₹1,00,000 (lump sum).
• Expected Annual Return: 12% (equity mutual fund).
• Investment Duration: 25 years.
• Estimated Capital Gains: ₹16,00,006.
• Total Corpus (Principal + Gains): ₹17,00,006.

Tax on Capital Gains

Next, it’s important to account for taxes on your capital gains, which can affect your final corpus. When you factor in the applicable exemptions and tax rates, here’s how the numbers break down:

• Tax Exemption on LTCG: ₹1,25,000.
• Taxable Gains: ₹14,75,006.
• Tax Rate on LTCG: 12.5%.
• Estimated Tax Payable: ₹1,84,376.
• Post-Tax Corpus: ₹15,15,630.

Systematic Withdrawal Plan (SWP) Setup

To start generating a steady monthly income from your post-tax corpus, you can set up a Systematic Withdrawal Plan (SWP). This involves investing your corpus in low-risk hybrid or debt funds and withdrawing a fixed amount regularly. Curious about how much you can withdraw? Use this handy SWP calculator to estimate your monthly income.

• Corpus Invested: ₹15,15,630.
• Investment Type: Hybrid/Debt Fund (low risk).
• Expected Annual Return: 7%.
• Withdrawal Period: 25 years.

Monthly Income from SWP

Under the SWP, you can withdraw a fixed monthly amount that provides financial stability over your chosen period. In this example, the estimated monthly income from the corpus would be around ₹10,500 for 25 years.

• Estimated Monthly Income: ₹10,500.
• Total Withdrawn Over 20 Years: ₹31,50,000.
• Estimated Corpus Remaining After 30 Years: ₹4,040.

Summary

A one-time lump sum investment of ₹1 lakh in an equity mutual fund, growing at an expected annual return of 12% over 25 years, can build a substantial corpus of ₹17 lakh before taxes. After accounting for long-term capital gains tax, the post-tax corpus stands at around ₹15.15 lakh.

By investing this amount in a low-risk hybrid or debt fund and using a Systematic Withdrawal Plan (SWP) with an expected 7% return, investors can generate a steady monthly income of approximately ₹10,500 for 25 years, ensuring financial stability and longevity of their corpus.

Read More: SIP Calculator: How ₹4,000 Monthly SIP Can Help You Reach ₹60 Lakh.

Conclusion

Starting with a modest ₹1 lakh lump sum investment can pave the way for a reliable income stream through smart investing and disciplined withdrawals. The combination of long-term growth and a carefully planned SWP helps investors maintain financial independence during retirement or other phases of life.

Using tools like the SWP calculator can help tailor withdrawal plans to individual needs, making it easier to plan for a secure financial future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.