The journey to financial freedom is built on disciplined investments and smart financial planning. The ICICI Prudential Freedom SIP emerges as a unique tool in this journey, designed to help individuals build wealth steadily and then enjoy a stream of secondary income to support their dreams and aspirations.
Core Concept
The ICICI Prudential Freedom SIP is a systematic investment plan (SIP) with an added layer of automation and flexibility. It allows you to invest a fixed amount regularly in a chosen mutual fund scheme for a pre-defined period. Once this SIP tenure is complete, your accumulated investments are automatically switched to a target scheme of your choice. From this target scheme, you can then initiate a systematic withdrawal plan (SWP) to receive regular payouts, essentially creating a secondary source of income. For example, a ?10,000 monthly SIP for 30 years could potentially yield an SWP of ?1.2 lakh per month.
How It Works
The process is straightforward.
- Choose Your SIP: Select an eligible mutual fund scheme (source scheme) and decide on your monthly SIP amount and tenure (options range from 8 to 30 years).
- Grow Your Wealth: Invest consistently through your SIP for the chosen tenure.
- Switch to Target Scheme: At the end of the SIP tenure, your investments are automatically switched to the target scheme you’ve selected.
- Enjoy Regular Payouts: Set up an SWP from the target scheme to receive monthly payouts.
Benefits of the Freedom SIP
Freedom SIP encourages a disciplined and goal-oriented approach to investing. You can align your SIP tenure and SWP amount with your financial goals such as early retirement, travel, or funding your child’s education.
You have the freedom to choose from a wide range of eligible schemes for both SIP and SWP, allowing you to tailor your investments to your risk appetite and financial objectives.
By investing in equity-oriented schemes through the SIP, you can potentially benefit from long-term market growth and create a substantial corpus for future needs.
The SWP feature provides a regular income stream, giving you the freedom to pursue your dreams without worrying about depleting your capital.
The automated switch and SWP features require minimal intervention once you’ve set up your Freedom SIP.
Illustrative Examples
Let’s consider a couple of scenarios to understand how the Freedom SIP can work.
- Early Retirement: A 30-year-old starts a Freedom SIP with ?10,000 monthly for 20 years. Assuming a 12.93% annualized return, the corpus could be ?1.02 crores, with an SWP of ?50,000 per month, creating a secondary income stream to support their early retirement lifestyle.
- Funding Child’s Education: A couple invests ?10,000 monthly for 15 years. With the same hypothetical return (12.93% annualized return), the corpus could grow to ?51 lakhs, allowing SWP withdrawals for education costs.
Conclusion
ICICI Prudential Freedom SIP offers a structured and convenient way to achieve your financial goals and attain the freedom to live life on your terms. By combining the power of disciplined investing with the flexibility of automated withdrawals, build a secure financial future and unlock your dreams.
Disclaimer: The Views are Personal and not a part of the Outlook Money Editorial Feature