As human beings, we are all born free. However, as time passes, we all feel constrained. This is why, as individuals, we are always looking for freedom – freedom to follow your passion, freedom to travel the world anytime, freedom to decide when to retire, and freedom to live the life that you had imagined. But as they say, there is no such thing as a free lunch. You need to pay a price for everything, even your financial freedom.
The question then is, what do you need to become financially free? The answer to this lies in creating a secondary cash flows which will take care of the various financial requirements at a certain point in time. As a means to help you in the journey ICICI Prudential Mutual Fund has launched a feature called Freedom SIP.
The process is very simple. You start your journey to freedom with a monthly SIP in a scheme of your choice. This scheme is known as the source scheme. Ideally this should be equity oriented as the investment tenure is 8 years plus. The investor has the option to choose the tenure of SIP ranging from 8 years to 30 years. SIP enables you to consistently invest your money and accumulate wealth over a period of time.
Once the SIP period is over, the accumulated wealth is transferred to a target scheme. This scheme can be a debt or a hybrid one as the target here is to protect the wealth created over time. It is from this scheme, systematic withdrawal of money through a Systematic Withdrawal Plan (SWP) will be initiated. For example: If one invests Rs. 10,000 for a period of 8 years, the SWP amount will be same as the Sip amount. However, as the timeframe of investment increases, the SWP amount also increases.
To conclude, even though money can’t buy happiness, it can set you financially free. Thus, it is imperative that you plan your investments optimally by choosing the investment options that are best suited for your requirements and embark on your path to financial freedom.
—- DANNY PIEDADE MORAES, Mutual Fund Distributor, Goa