In 2012 I finished C.S. from Malwa Polytechnic and joined a TATA MNC in Jamshedpur. Alongside my job (2012–2014) I started building websites for coding, software, SEO and themes.
In a short time I earned a lumpsum of ₹52 lakh from web work and services. I wanted to secure and grow that money.
On 17 January 2014 I decided to split part of that lumpsum between two paths: a fixed deposit and a systematic withdrawal plan (SWP) from a mutual fund. I put ₹22 lakh into a 10-year FD in SBI with monthly payout.
At the same time, persuaded by a friend who worked at ICICI Securities, I opened a Demat account and invested ₹22 lakh into an equity mutual fund — the HDFC Flexi Cap Fund — and started a monthly SWP of ₹16,348 (the same amount as FD monthly payout).
I planned the SWP until December 2024 and kept the FD for 10 years so it would mature around January 2024 (10 years from start).
This experiment gave me a real-life comparison of FD vs SWP on the same capital and same monthly cashflow. The results surprised me — and they will probably surprise you too.
Quick Summary (Numbers I lived)
Initial investments: ₹22,00,000 in FD (SBI) + ₹22,00,000 in SWP (HDFC Flexi Cap).
FD (10 years, monthly payout at ~9.18% then): Monthly income ₹16,348. Over 10 years total payouts = ₹19,61,760. FD principal returned = ₹22,00,000. Total value from FD after 10 years = ₹41,61,760.
SWP (HDFC Flexi Cap): I withdrew ₹16,348 per month as SWP — total withdrawn in 10 years = ₹19,61,760. In January 2024 the remaining value of the fund was ₹68,93,000. Adding FD principal (₹22,00,000) to the SWP fund value gives a combined asset of ₹90,93,000.
Conclusion (my case): SWP from equity fund produced far higher wealth than FD in the same 10-year window. Also note: fixed deposit rates now (2025) are much lower (about 6.75% p.a.), so FD looks less attractive for wealth creation today.
How I set up both plans — exact steps I took
I want to be clear so you can replicate or test the idea:
- I kept my job and used side earnings to create a lumpsum of ₹52 lakh.
- On 17 Jan 2014 I opened an FD at SBI for ₹22 lakh, tenure 10 years, monthly payout option. At that time FD rates were about 9.25% p.a. with monthly payout effective rate ~ 9.18%. My monthly interest payout = ₹16,348.
- Same month I opened a Demat/Mutual Fund route via ICICI Direct (friend helped) and invested ₹22 lakh in HDFC Flexi Cap Fund. I setup an SWP of ₹16,348 per month — matching the FD monthly income.
- I chose the SWP to keep my monthly cashflow identical so I could fairly compare capital growth and total outcomes.
Basic finance concepts — FD vs SWP (simple)
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Fixed Deposit (FD) is a bank product. You deposit a fixed amount for a fixed period and earn interest at a guaranteed rate. Predictable, low risk, low growth (relative to equities).
Systematic Withdrawal Plan (SWP) is a way to withdraw a fixed amount from a mutual fund regularly (monthly, quarterly). The underlying investment stays invested (in equities or hybrid funds) and can grow or fall based on market performance. Principal risk exists but so does upside from equity growth.
Key differences in one line
FD = guaranteed income, low growth. SWP = market-linked income, higher growth potential, higher risk.
Numbers and math — what actually happened (my case)
FD result (my real numbers)
FD amount: ₹22,00,000 invested in Jan 2014, 10-year tenure, monthly payout. Monthly payout = ₹16,348. Over 10 years (120 months) total payouts =
₹16,348 × 120 = ₹19,61,760.
At maturity the bank returned the principal ₹22,00,000. So total value gained from FD after 10 years =
₹22,00,000 (principal) + ₹19,61,760 (interest paid out) = ₹41,61,760.
SWP result (my real numbers)
I invested ₹22,00,000 in HDFC Flexi Cap Fund and took an SWP of ₹16,348 per month (same amount). Total withdrawals over 10 years = ₹19,61,760 (same as FD).
But the fund's remaining value in Jan 2024 was ₹68,93,000. So the SWP route left me with:
₹68,93,000 (remaining fund) + ₹19,61,760 (withdrawn) = ₹88,54,760.
In my earlier summary I compared SWP fund value plus FD principal and showed a combined asset of ₹90,93,000 because I considered both investments together (FD principal ₹22,00,000 + SWP fund ₹68,93,000 = ₹90,93,000). Both ways the SWP outcome was clearly superior to the FD-only outcome.
Why SWP beat FD in my case — plain reasons
Here are simple, practical reasons the SWP path created more wealth:
- Equity returns were higher than FD interest: Equity markets over that decade gave much higher returns than the FD rate available at the time.
- Compounding on remaining capital: In SWP, since you withdraw a fixed amount, the remaining capital stayed invested and captured growth in rising markets.
- Inflation beating: FD interest after tax and inflation often underperforms equities net of inflation. SWP had higher real returns.
- Long time horizon: A 10-year horizon is normally favorable to equity investing as it smooths out volatility and captures market growth.
Detailed comparison table (FD vs SWP) — my real example
| Feature | FD (SBI) — my case | SWP (HDFC Flexi Cap) — my case |
|---|---|---|
| Initial amount | ₹22,00,000 | ₹22,00,000 |
| Monthly payout (chosen) | ₹16,348 | ₹16,348 (SWP) |
| Total withdrawn in 10 years | ₹19,61,760 | ₹19,61,760 |
| Value at end (principal + payouts) | ₹41,61,760 (₹22,00,000 principal + ₹19,61,760 payouts) | ₹88,54,760 (₹68,93,000 remaining + ₹19,61,760 withdrawn) |
| Risk | Low (guaranteed) | Higher (market risk) |
| Liquidity | Penalty if broken early | Can sell units, but market price varies |
| Tax | Interest taxed as per slab | Long-term capital gains (LTCG) and dividends tax rules apply |
Pros and Cons — FD vs SWP (simple list)
| FD — Pros & Cons | SWP — Pros & Cons |
|---|---|
Pros:
|
Pros:
|
How to choose between FD and SWP — plain steps
- Decide your goal: Is it capital preservation or wealth creation? FD = preservation, SWP = creation (with risk).
- Time horizon: For horizons <3 years FD or debt funds are better. For 7–10+ years equity via SWP tends to outperform.
- Cashflow need: If you need guaranteed monthly income without risk, prefer FD. If you can accept market swings for higher long-term growth, SWP is better.
- Tax & inflation: Compare post-tax returns vs inflation — FD often loses purchasing power, while equity can grow above inflation.
- Emergency buffer: Always keep 6–12 months of liquid funds before committing large capital to equity.
Where SWP can go wrong — and how to protect yourself
SWP is not risk-free. If you start withdrawing during a market crash you may erode capital. Here is what I recommend:
- Prefer SWP from a well-diversified large-cap or flexi-cap fund with a long track record. (My choice: HDFC Flexi Cap Fund.)
- Use a buffer of 6 months of expenses in liquid funds so you don't redeem in a crash.
- Keep withdrawal amount conservative — not more than sustainable yield of the fund.
- Review tax rules for capital gains and plan withdrawals tax-efficiently.
Related posts
To understand more about how equities and gold behave over time, read my post Gold vs Large Cap Stocks – Which Will Make You a Crorepati in the Next 5 Years. If you want to learn the practical steps to start, see How to Start Trading in the Indian Stock Market – From ₹0 to ₹1 Crore Portfolio.
For a case study on monthly income goals, check Want ₹20,000 monthly income from ₹20 lakh? FD or SWP — Which is better?. If you follow large companies, read my analysis on Reliance Industries Share Price – Target Price Discussion (2026).
Read Gold vs Stocks Start Trading Guide
Taxes — short and simple
FD interest is taxed as per your income tax slab each year. So if you are in a higher slab, effective FD returns reduce. Mutual funds have special rules: equity funds held >1 year get long-term capital gains (LTCG) tax (in India currently 10% on gains above ₹1 lakh in a year), while short-term gains are taxed as per slab. Always calculate post-tax returns when comparing.
What I would do now — if I start today (my advice)
Given current FD rates (much lower than in 2014) and my experience, if my goal is wealth creation over 7–10+ years, I would:
- Prefer equity mutual funds (systematic investments) or lumpsum in good funds and then use SWP for cashflow.
- Keep a small portion (10–20%) in safe FDs or liquid funds for emergencies and mental comfort.
- Not use bank FDs for long-term growth — they are for safety or short-term parking.
Real example: Why HDFC Flexi Cap helped (short)
Flexi-cap funds can switch exposure between large, mid and small caps. During 2014–2024 this flexibility helped the fund capture growth across market cycles. This is why my SWP left a large remaining value in the fund. If you'd like to study that fund's performance, see this page: HDFC Flexi Cap Fund performance.
Checklist before you choose FD or SWP
- What is your horizon? (Short <3 years → FD; long 7–10+ years → SWP)
- Do you need guaranteed income? (Yes → FD)
- Are you comfortable with market swings? (Yes → SWP)
- Have you planned for tax & inflation? (Important for both)
- Do you have an emergency fund? (Yes → take risk; No → build emergency fund first)
Common mistakes to avoid
- Using all your money in FD when inflation is high.
- Starting SWP without a buffer — forcing you to sell during a crash.
- Ignoring taxes and exit loads while switching funds.
- Choosing funds purely on past 1-year returns — look at 5–10 year performance.
Final verdict — in my words
In my real experiment (Jan 2014 → Jan 2024) both plans gave identical monthly cashflow, but the SWP route created far more wealth because the invested capital remained exposed to equity growth. FD gave safety and predictability — useful for capital preservation, but not for large wealth creation over long horizons.
Action plan — if you like my approach
If you want to try a similar approach:
- Keep an emergency corpus of 6–12 months expenses in a savings or liquid fund.
- Choose a quality flexi-cap or large-cap fund with a long track record. (I used HDFC Flexi Cap — performance link above.)
- Invest a lump sum or SIP and set an SWP for your desired monthly income. Start with a conservative withdrawal amount.
- Review annually, rebalance if needed, and avoid panic selling during dips.
10 FAQs
1. What is SWP and how is it different from SIP?
SWP (Systematic Withdrawal Plan) lets you withdraw a fixed amount regularly from your existing mutual fund investment. SIP (Systematic Investment Plan) is a method to invest fixed amounts regularly. SWP gives income; SIP builds corpus.
2. Is SWP safe for monthly income?
SWP is as safe as the underlying fund. If the fund is equity-based, it has market risk. Use conservative withdrawal rates and keep a cash buffer to avoid selling during down markets.
3. Should I choose FD for retirement income?
FD can be part of retirement income if you want certainty. But for long-term retirement with inflation protection, a mix of equity through SWP + safe fixed income is better.
4. How much can I safely withdraw per year from an equity fund?
There is no fixed rule, but many advisers suggest 4–6% of starting corpus per year as a conservative withdrawal rate. Your risk tolerance and fund performance matter.
5. What happens to my SWP if markets fall?
If markets fall, the NAV falls and the fund value reduces. If you continue withdrawals, you might withdraw more units at lower prices — this is bad if the fall is long; hence a buffer helps.
6. How is FD interest taxed vs mutual fund gains?
FD interest is taxed as normal income at your slab. Equity mutual fund long-term gains (>1 year) are taxed at 10% on gains above ₹1 lakh (in India). Short-term gains are taxed as per slab.
7. Can SWP be used with debt funds?
Yes. If you want lower risk, consider SWP from debt or hybrid funds. The growth will be lower but volatility is also lower compared to equity funds.
8. How frequently can I withdraw with SWP?
Most funds allow monthly, quarterly, half-yearly or yearly withdrawals. I used monthly to match my FD payouts.
9. Should everyone switch from FD to SWP?
No. If you need capital safety or are near-term, FD might be better. If you want wealth creation and can handle risk, SWP (from equities) is preferable for long horizons.
10. Where can I learn more about trading and funds?
Check my practical guides: How to Start Trading in the Indian Stock Market and income case study Want ₹20,000 monthly income from ₹20 lakh?.
Appeal — share, comment and discuss
If you found my experience useful, please share the article with friends and family who want clear monthly income and long-term wealth. Comment below with your questions — tell me if you prefer safety (FD) or growth (SWP) and why. Your reply helps me write more detailed guides and case studies.
Also read: Gold vs Large Cap Stocks – Which Will Make You a Crorepati in the Next 5 Years · Reliance Industries Share Price – Target Price Discussion.
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