Want ₹20,000 monthly income from ₹20 lakh? FD or SWP — Which is better?

Er. M. Alam
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I’ll go step by step: set the assumptions, do the math for both options, compare pros & cons, and conclude with what I’d personally lean toward (with caveats). Please feel free to challenge, ask follow-ups, or bring your own scenarios.

Setting the scene & assumptions

First, what do we mean by ₹20,000/month from ₹20,00,000 (₹20 lakh)? That means you want a yield / withdrawal rate = 12% annually.

So you are trying to get 12% per annum effective income (in some form) from your capital. That’s a high target, considering typical safe-return avenues in India today.

To evaluate, we need realistic interest / return rates for FDs and also plausible assumptions for mutual funds + SWP (Systematic Withdrawal Plan). Also, taxation, volatility and safety matter.

Let’s gather some reference rates first…

Here are some current FD rates in India (for regular investors, non-senior citizens):

So realistically, for ₹20 lakh, you might find an FD rate around 6.0% to 7.0% p.a. (or a little higher for special schemes or senior citizens).

If you invest ₹20 lakh in an FD at 7% p.a., the annual interest is:

₹20,00,000 × 7% = ₹1,40,000 per year

Divided by 12, that’s about ₹11,666 per month — well short of ₹20,000.

So, FD alone cannot reliably generate ₹20,000 every month unless you take higher risk or use non-bank instruments.

👉 Read also: IRFC Share Price & Target — A Real Discussion

What is SWP (Systematic Withdrawal Plan)?

Want ₹20,000 monthly income from ₹20 lakh? FD or SWP — Which is better?


SWP means investing a lump sum in mutual funds and withdrawing a fixed amount monthly or quarterly by redeeming units. Part of the withdrawal is capital, and part is capital gain/loss. (Groww)

Key benefits of SWP:

SWP offers higher potential returns but also higher risk than FDs.

👉 Read also: HDFC Flexi Cap Fund Is Beating 90% of Mutual Funds in 2025

Comparison: FD vs SWP

CriteriaFD (Fixed Deposit)SWP (Mutual Fund)
SafetyVery high (insured, fixed rate)Market-linked, riskier
Return potential6–7% typical8–12% possible (long-term)
TaxInterest taxed at slab rateCapital gains tax only on profit portion
FlexibilityLow (fixed tenor)High (can pause or modify)
Inflation protectionWeakBetter chance to beat inflation
Corpus stabilityPrincipal intactMay erode in bad markets

Which is better?

  • FDs are safe but returns are too low to meet ₹20,000/month target.
  • SWP can meet the target with moderate risk and smart fund selection.
  • Hybrid plan: Combine both — part FD (safety), part SWP (growth & income).
  • Example: ₹8 lakh in FDs + ₹12 lakh in mutual funds with SWP for ₹20,000/month.
  • Be flexible — reduce withdrawals during bad years to preserve corpus.

Summary

  • FD: Safe, predictable, but low yield (6–7%).
  • SWP: Higher income potential, but comes with risk.
  • Best option: Mix of both for steady + sustainable monthly income.

💬 Your Turn!

What’s your choice — the safety of FD or the flexibility and higher growth of SWP? Share your opinion in the comments below. Don’t forget to share this post with friends or family planning for steady monthly income!

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