This post documents a systematic withdrawal plan (SWP) simulation on a ₹70 lakh lump-sum investment in Nippon India Small Cap Fund — Direct Growth, started in April 2024. The analysis covers 24 months of actual NAV data, a month-by-month capital erosion/growth model, and a 10-year forward projection across five market scenarios.

Portfolio Setup

Initial Investment	₹70,00,000
Fund	Nippon India Small Cap Fund — Direct Growth
Entry NAV	₹171.30 (Apr 2024)
Units Purchased	~40,864 units
Monthly Withdrawal	₹49,560 (0.708% of original capital)
Withdrawal Mechanism	Units redeemed at prevailing NAV each month

The withdrawal rate of 0.708% per month (≈8.5% annually) was chosen to stress-test whether the portfolio can sustain income withdrawals while preserving or growing capital in a small-cap fund over a decade.

What the Simulation Models

Historical phase (Apr 2024 – Apr 2026):
Actual NAV data is used month by month. Each month, ₹49,560 worth of units are redeemed at that month’s NAV. The remaining units compound at the fund’s actual returns. No assumptions — pure historical replay.

Forward projection (FY2027 – FY2036):
Five scenarios are modelled, each spanning 10 years with exactly 3 negative return years to stress-test drawdown resilience. The withdrawal in the forward phase is 8.5% of that year’s opening capital (not fixed), so monthly income scales with portfolio size.

Historical Results (Actual NAV)
The fund had a strong run from Apr 2024, peaking at ₹202.86 in Sep 2024 — a 18.4% gain in 5 months. It then corrected sharply to ₹155.84 in Feb 2025 (a −23.2% drawdown from peak), before recovering to ₹192.08 by Apr 2026.

Despite withdrawing nearly ₹12L over 2 years, the portfolio retained ~94% of its original value — largely because the fund recovered from its Feb 2025 trough.

Forward Projection — 5 Scenarios

All scenarios assume 3 negative return years out of 10 (realistic for small-cap funds historically). Annual withdrawal = 8.5% of opening capital each year.

The base case (~14% average, consistent with Nippon Small Cap’s long-term historical returns) shows the portfolio more than doubling to ₹1.24Cr while generating ₹67L in total income over the decade.

Key Observations

1. SWP sustainability depends heavily on sequence of returns. A crash in Year 1–2 (deep bear) combined with 8.5% withdrawals can halve the corpus. The same average return but with crashes in later years (bull/superbull) leads to dramatically better outcomes.
2. Small-cap funds are volatile but rewarding over long horizons. The Feb 2025 drawdown of −23.2% recovered fully within 14 months. Investors who panicked and redeemed at the trough would have permanently impaired capital.
3. 8.5% withdrawal rate is aggressive. Safe withdrawal rate (SWR) research suggests 4–5% for equity portfolios. At 8.5%, capital preservation requires the fund to deliver >10% annualised returns consistently — achievable for Nippon Small Cap historically, but not guaranteed.
4. The first 2 years (actual data) show capital resilience. Starting at ₹70L and withdrawing ₹12L over 24 months, the portfolio sits at ~₹66L — only ₹4L below start despite the withdrawals. This is a function of the fund’s recovery post the Feb 2025 correction.

Explore the Interactive Dashboard
The full simulation is available as an interactive dashboard — switch between scenarios, view month-by-month NAV data, and explore the 10-year projection table in detail.

The dashboard includes:
• Month-by-month historical NAV and capital value (Apr 2024 – Apr 2026)
• 5-scenario 10-year forward projection with crash year highlighting
• NAV chart with entry, peak, and trough markers
• All-scenario comparison table

Disclaimer
This simulation is for educational and analytical purposes only. It is not investment advice. Past NAV performance does not guarantee future returns. Small-cap mutual funds are subject to high market risk. Consult a SEBI-registered investment advisor before making financial decisions.