Guides / SWP vs FD for Monthly Income: Which Works Better?
SWP vs FD for Monthly Income: Which Works Better?
1 Oct 2026If you want a monthly income from your savings, two common options are an FD and a mutual fund SWP (Systematic Withdrawal Plan).
FD interest
₹50 lakh at 7% earns about ₹3.5 lakh a year, or roughly ₹29,167 a month, before tax. Your principal stays the same, but the interest rate can change when you renew, and interest is taxed at your slab rate.
SWP
You hold the money in a mutual fund and withdraw a fixed amount every month. The rest stays invested.
Assume a steady 8% return and a ₹30,000 monthly withdrawal for 20 years:
| Item | Estimate |
|---|---|
| Total withdrawn | ₹72 lakh |
| Balance after 20 years | ₹69.6 lakh |
A withdrawal of ₹25,000 would leave about ₹99 lakh. Try your own plan in the SWP Calculator.
Important differences
| FD | SWP | |
|---|---|---|
| Returns | Fixed | Market-linked, uncertain |
| Principal | Safe | Can rise or fall |
| Tax | Interest taxed at slab rate | Only the gains part of each withdrawal is taxed |
A word of caution
Returns are never steady in real life. In a bad market, a high withdrawal can shrink the corpus quickly. Keep the withdrawal below the long-term growth, and consider keeping part of your money in safer options.
Try the SWP Calculator