ICICI Prudential Freedom SIP

ICICI Prudential Freedom SIP Plan Details

You may have heard many times that SIP is a disciplined way to invest in mutual funds. Didn’t they tell you that SIPs in the right funds can lead to financial independence? What if we were to tell you that now there is a product that ensures that not only do your SIPs have a proper plan and tenure but also an exit plan at the end of the tenure.

About ICICI prudential freedom sip

The icici prudential freedom systematic investment plan is a product that has been recently launched by ICICI Prudential offering investors a feature that helps them achieve their financial goals. The investor is encouraged to invest through Systematic Investment Plans in a discipline manner for a pre-decided tenure. At the end of the investment tenure the corpus is switched to a target fund and the investor can enjoy cash flows through a Systematic Withdrawal Process (SWP).

The following 3 steps clearly explain the process of investment in the ICICI Prudential Freedom SIP.

Step 1 – SIP

The investor can start his SIP in any of the following schemes, also known as the Source Schemes:

Schemes Available for Freedom SIP (Source Scheme)
ICICI Prudential Bluechip Fund
ICICI Prudential Multi cap Fund
ICICI Prudential Large & Mid cap Fund
ICICI Prudential India Opportunities Fund
ICICI Prudential Small cap Fund
ICICI Prudential Mid cap Fund
ICICI Prudential Dividend Yield Equity Fund
ICICI Prudential Focused Equity Fund
ICICI Prudential Value Discovery Fund
ICICI Prudential Asset Allocator Fund (FoF)
ICICI Prudential Balanced Advantage Fund
ICICI Prudential Equity & Debt Fund
ICICI Prudential Multi-Asset Fund

The investment can be for a predefined time period of 8 years, 10 years, 12 years or 15 years. The only frequency available for investments is monthly. The minimum amount that can be invested as systematic investment plan is the same as the permitted systematic investment plan in the selected source scheme.

Step 2 - Switch

Once the pre-defined period of the systematic investment plan investments under the Freedom SIP scheme is completed, the units which have been accumulated are transferred to the selected switch fund, also known as the Target Scheme. The available target schemes are as under:

Schemes Available for SWP (Target Scheme)
ICICI Prudential Asset Allocator Fund (FoF)
ICICI Prudential Balanced Advantage Fund
ICICI Prudential Equity & Debt Fund
ICICI Prudential Multi-Asset Fund

One must note that the switch is made as a lump sum to the target fund. Also, the source fund and the target fund cannot be the same.

Also Read: How to Select the Right Investment Advisor?

Step 3 – Withdrawal

Once the transfer is complete, the Systematic Withdrawal Plan is to be activated. The amount for the SWP is as per the matrix below or as per the amount mentioned in the mandate by the investor.

Predefined SIP TenureMonthly SWP Installment
8 Years1.0X of Monthly SIP Installment
10 Years1.5X of Monthly SIP Installment
12 Years2.0X of Monthly SIP Installment
15 Years3.0X of Monthly SIP Installment

The pictures given below will explain this process better:

8 year predefined tenure

10-year predefined tenure

12-year predefined tenure

15-year predefined tenure

Insurance under the ICICI Prudential Freedom Sip Scheme

Another good feature of the Freedom SIP from ICICI Prudential is that the investment offers you a life insurance cover as follows:
Year 1: 10 times the monthly systematic investment plan installment.
Year 2: 50 times the monthly SIP installment.
Year 3 onward: 100 times the monthly systematic investment plan installment.
Please note, the insurance cover provided is capped to Rs. 50 lakhs per investor across all schemes/plans/folios.

Also Read: Best Time to Start an SIP During Crash

Conclusion

It is a good disciplined way to prepare for your financial goals. Depending on your time horizon you could select any of the 4 SIP tenures. One may also look at the option of starting a fresh Freedom systematic investment plan whenever there is an increase in the monthly income of the investor. The idea should be to use different source funds to make the investment and different target funds for the withdrawals. There would be 2 primary benefits of this method. 1. You get diversification between funds. 2. As the tenure of every subsequent SIP gets completed, the total sum of withdrawals will keep increasing. As the investor reaches close to his retirement, the monthly withdrawals can be significant.

Frequently Asked Questions

Q1. What Options are available for the ICICI Prudential Freedom SIP?

Ans. Both direct and regular options of the source schemes mentioned in the article above are available for investments. However, one can select only growth option.

Q2. Can I change any particulars of the SIP?

Ans. An investor is not permitted to change any of the registered particulars, such as SIP tenure, SIP scheme (source scheme), SIP amount, SWP scheme (target scheme) or SWP amount. However, the investor can modify the bank mandate at any time during the SIP tenure, by submitting the SIP mandate change form.

Q3. Can I choose my own SIP/SWP date?

Ans. Yes. An investor may choose any SIP date for the investment in Freedom SIP. In case the date falls on a non-business day, the SIP is processed on the next working day. The SWP date would be the same as the SIP date.

Q4. Can I register multiple Freedom SIP?

Ans. Yes. An investor is permitted to register multiple Freedom SIP under the same or different schemes under a folio.

Q5. Can I cancel the icici prudential freedom sip?

Ans. Yes. An investor can cancel at any time. On cancellation of the icici prudential freedom, the switch and the SWP automatically get cancelled.

Q6. Is there an Exit Load?

Ans. Yes. The exit-load in case of Freedom systematic investment plan is in-line with the respective scheme features. This would be applicable in case of a redemption or Switch-Outs.

Q7. Will the Switch in the case of ICICI Prudential Freedom SIP take place on the date of the last SIP?

No. The switch takes place T+15 days after the date of the last SIP installment (T being the date of the last ). In case T+15 days is a holiday; the switch is made on the next working day.

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