Worked Example
FD-slab-rate vs Equity-SWP: which builds more wealth over 10 years?
Scenario
Suresh, age 40, business analyst in Bengaluru, ₹22 lakh annual income, supporting wife + 2 kids + parents, ₹1 lakh monthly expenses
Inputs
- Years
- 10
- Amount INR
- 25,00,000
- Equity-SWP tax %
- 12.5
- FD-slab-rate tax %
- 30
- Equity-SWP return %
- 12
- FD-slab-rate return %
- 7
Calculation
- 1.
FD-slab-rate effective post-tax rate
7% × (1 − 30% tax) → 4.9%
- 2.
Equity-SWP effective post-tax rate
12% × (1 − 12.5% tax) → 10.5%
- 3.
FD-slab-rate corpus at year 10
₹25L × (1+0.049)^10 → ₹40.34 L
- 4.
Equity-SWP corpus at year 10
₹25L × (1+0.105)^10 → ₹67.85 L
- 5.
Wealth difference
|4033619 − 6785202| → ₹27.52 L
Conclusion
Equity-SWP wins by approximately ₹27.5 lakh over 10 years — driven by return rate.
Tradeoffs
Post-tax real returns matter more than nominal headline rates. FD-slab-rate loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.