Investment
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SWP vs FD Interest Payout
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Monthly income from a mutual fund SWP vs a fixed deposit interest payout — post-tax comparison.
Visual Comparison
Key Differences
| Feature | SWP (Mutual Fund) | FD Interest Payout |
|---|---|---|
| Source of income | Partial redemption of units | Interest earned on principal |
| Capital preservation | Principal may appreciate | Principal unchanged |
| Tax | LTCG 12.5% on gains above ₹1.25L | Taxable at slab rate each year |
| Inflation protection | Returns can beat inflation | Fixed rate — inflation erodes value |
| Flexibility | Adjust withdrawal anytime | Fixed payout schedule |
When to Choose Which
Choose SWP (Mutual Fund)
- Retirement phase with mutual fund corpus
- Want tax-efficient monthly income
- Corpus is primarily equity/hybrid funds
- Long retirement horizon (15+ years)
Choose FD Interest Payout
- Retiree needing guaranteed monthly income
- Very low risk tolerance
- Short-term income need (1–3 years)
- Capital absolutely cannot be at market risk
Frequently Asked Questions
Systematic Withdrawal Plan — you withdraw a fixed amount monthly from your mutual fund corpus. Remaining units stay invested and continue to grow.
SWP redemptions from equity funds held 12+ months are taxed at LTCG 12.5% only on gains, and only above ₹1.25 lakh annual gain. More tax-efficient than FD for higher income brackets.
If withdrawal rate exceeds return rate, corpus depletes. A common guideline: keep SWP amount at 4–5% of corpus annually (₹50,000/month from ₹1.5 crore corpus at ~4% annual rate).
Banks offer monthly, quarterly, or annual interest payout on FD. The interest is credited to your account and taxed as income in that year.
FD gives guaranteed fixed income. SWP income depends on fund performance but is often higher post-tax for long-term equity fund corpus.