The desire for freedom is inherent in all of us. Whether driven by passion, wanderlust, retirement plans, or simply living life on our own terms, the pursuit of financial freedom is a common goal. While many earn a good income, not everyone takes the necessary steps to invest wisely.
Financial freedom is a universal aspiration. College graduates fear financial instability and dependence on parents. Working professionals often find themselves burdened with various expenses, hindering their dream of working on their own terms. Supporting the next generation may also compromise personal aspirations. For retirees, realizing their dream lifestyle after retirement becomes challenging due to inadequate savings. In essence, everyone yearns for financial freedom on their own terms.
'Rich Dad Poor Dad' author Robert Kiyosaki puts it succinctly when he said: “Financial struggle is often the result of people working all their lives for someone else. Often in the real world, it's not the smart who get ahead, but the bold.” To secure a secondary cash flow and pave the way towards financial independence, a smart approach is to establish a systematic investment and withdrawal plan. Helping you in this journey is the Freedom SIP feature provided by ICICI Prudential Mutual Fund. The aim of the feature is help you to invest and withdraw in a systematic manner such that one can enjoy life without having to worry about cash flows.
Understanding Freedom SIP
Freedom SIP is an innovative feature that allows for monthly investments through Systematic Investment Plans (SIP) in a chosen source scheme. After a predetermined tenure, the investment is switched to a target scheme, followed by monthly systematic withdrawal plans (SWP) from the target scheme. This process enables systematic wealth creation through mutual fund investments, wealth preservation through scheme switching, and finally, systematic money withdrawal to achieve financial freedom.
How It Works
With ICICI Prudential Freedom SIP, you can invest regularly through SIPs in your chosen source scheme for a specified duration. You have the flexibility to select SIP tenures of 8, 10, 12, 15, 20, 25, or 30 years. The aim at this stage is wealth creation. Once the SIP tenure is complete, your investments will be switched to a target scheme of your choice. The aim at this stage is to protect the wealth that is created over the years from market volatility. Additionally, you can decide on a desired SWP amount, which will be regularly transferred to your bank account.
The default SWP amount for an 8-year SIP tenure with a monthly SIP of Rs 10,000 is Rs 10,000. For higher tenures, the default SWP amount increases; for instance, it becomes Rs 15,000 for 10 years, Rs 20,000 for 12 years, and so forth.
Advantages of Freedom SIP
Freedom SIP offers three key advantages. Firstly, it allows you to choose from a wide range of schemes based on your personal goals and risk appetite. Secondly, it helps instill long-term investment habits, encouraging you to stay invested for the entire SIP tenure to maximize potential benefits. Lastly, it promotes a goal-oriented approach, as you can align the investment tenure with your financial aspirations, enabling you to set a realistic path towards achieving your goals.
Case Study
Let us consider a case study of a 20-year Freedom SIP. Ram invested Rs 10,000 per month from 1995 to 2014, making a total investment of Rs 24 lakh. After the SIP tenure, he opted for an SWP of Rs 50,000 per month. From 2014 to May 2023, Ram received Rs 51 lakh via SWPs. However, parallely, the market value of his corpus grew to an impressive Rs 2.91 crore even after achieving his financial freedom goals. This exemplifies the power of Freedom SIP, which allows you to generate wealth even if you withdraw some of the corpus for your needs.
To conclude, Freedom SIP is an ideal strategy if you seek to invest systematically with the aim of securing a regular income in the future. While financial freedom may have different meanings for different individuals, its essence remains the same: the ability to live life on your own terms, free from financial burdens, and achieving your personal goals. Do consider Freedom SIP and embark on your journey towards financial independence.
