Author: Deepesh Arora,Director, Silverline Wealth Management Pvt Ltd
Deep within each of us lies a craving for freedom—an aspiration driven by passion, wanderlust, retirement dreams, or a simple desire to shape life on our own terms. Despite earning well, not everyone takes the necessary steps toward astute investment and hence, a better future.
In the wise words of Warren Buffett, a luminary in the investment realm, "For an investor, temperament, not intellect, is the most critical factor for success. It requires a temperament that neither derives great pleasure from being with the crowd nor against the crowd."
Emphasising a fundamental shift in perspective becomes imperative. Therefore, to traverse the route to financial independence and establish a secondary cash flow, a sagacious strategy involves implementing a systematic investment and withdrawal plan. Enter Freedom SIP—a transformative tool propelling you toward your financial aspirations. Here is all you need to know.
The Quest for Financial Liberation
The pursuit of financial freedom resonates universally. Recent graduates dread financial instability and dependence on parents. Working professionals often find their dreams stifled by various expenses, hindering their vision of working on their own terms. Even supporting the next generation may compromise personal aspirations. For retirees, achieving their dream lifestyle post-retirement becomes challenging due to inadequate savings. Essentially, everyone aspires for financial freedom tailored to their unique terms.
Decoding Freedom SIP
Freedom SIP is an interesting feature facilitating monthly investments through Systematic Investment Plans (SIP) in a selected source scheme. After the SIP tenure is over, the corpus created seamlessly transitions to a target scheme, followed by monthly systematic withdrawal plans (SWP) from the chosen scheme. The default monthly SWP payout amounts offer a glimpse of the potential withdrawal, enabling systematic wealth creation through mutual fund investments, preservation through scheme switching, and ultimately, systematic money withdrawal for financial freedom.
Combining systematic investment with planned withdrawal forms a robust financial strategy, for wealth creation and systematic withdrawal. Systematic investment cultivates disciplined savings and capitalises on market fluctuations, while planned withdrawal safeguards financial goals, providing a reliable income stream. This dynamic duo fosters financial resilience and long-term prosperity.
The Operational Symphony
Operationalizing ICICI Prudential Freedom SIP involves regular SIP investments in your chosen source scheme for a specified duration. Flexibility reigns as you can opt for SIP tenures ranging from 8, 10, 12, 15, 20, 25, or 30 years. Post the SIP tenure, your investments seamlessly shift to a target scheme of your choice—an integral step in the wealth creation and protection plan. Additionally, you can set your desired SWP amount, ensuring regular transfers to your bank account.
For an 8-year SIP tenure with a monthly SIP of Rs. 10,000, the default SWP amount stands at Rs. 10,000. Increase the tenure for 10 years, the SWP climbs to Rs. 15,000 and Rs. 20,000 for 12 years.
The Prowess of Freedom SIP
Freedom SIP has three pivotal advantages. Firstly, it empowers you to select from a diverse array of schemes aligned with your personal goals and risk appetite. Secondly, it fosters enduring investment habits, urging you to stay committed throughout the SIP tenure for maximum benefits. Lastly, it champions a goal-oriented approach, enabling alignment of the investment tenure with your financial aspirations and forging a realistic path towards your goals.
A 20-year Financial Odyssey
Consider a 20-year Freedom SIP case study. From 1995 to 2014, Raman invested Rs 10,000 monthly, totaling Rs 24 lakh. Post-SIP tenure, Raman opted for an SWP of Rs 50,000 monthly. From 2014 to May 2023, Ram received Rs 51 lakh via SWPs. Impressively, the market value of his corpus surged to Rs 2.91 crore, underscoring the might of Freedom SIP in wealth generation, even with periodic corpus withdrawals.
In conclusion, Freedom SIP emerges as the quintessential strategy for systematic investment with a view to securing a steady income in the future. While financial freedom holds diverse meanings for individuals, its core essence remains unaltered: the ability to live life on your terms, unburdened by financial constraints, and achieving personal goals. Embrace Freedom SIP and set forth on an exhilarating journey towards financial independence.