To earn a regular income, many of us invest in bank fixed deposits and postal monthly income savings plans. But they are unsuitable to those in higher income-tax brackets because interest is taxed. A mutual fund (MF) scheme's systematic withdrawal plan (SWP) is a better alternative. Just like an MF allows you to invest regularly through a systematic investment plan, an SWP does the opposite. It allows you to withdraw regularly, by withdrawing units. And it's more tax-efficient. Long-term capital gains are lower than dividend taxes, as dividend income is taxed at the individual's tax bracket. Remember, any income plan will eat into your principal investments if a fund fares poorly.
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