What is Freedom SIP in Mutual Funds? Experts Guide
Are you looking for a simple yet powerful way to grow your savings and ensure a steady income stress-free? If yes, the Freedom SIP in mutual funds is a strategy that combines the best of both worlds: investing via SIP and withdrawing through SWP.
This analysis explores how it offers a great way to build your wealth over time. This way you could enjoy a regular income stream when you need it.
Moreover, you will the a detailed comparison of freedom SIP Vs normal SIP, concluding with which is better for your financial portfolio for 2025.
Let’s start the analysis by learning what is freedom SIP with more clarity.
What is Freedom SIP?
The Freedom SIP means it is an investment strategy that helps investors achieve financial corpus over time. It’s a powerful combination of two tried-and-tested methods: Systematic Investment Plans (SIP) and Systematic Withdrawal Plans (SWP). The SIP lets you invest a fixed amount regularly into a mutual fund, while the SWP allows you to withdraw a set amount monthly once your investment has grown. It’s the perfect way to create a sustainable, long-term investment plan that helps you build financial security without the guesswork.
To better understand what freedom SIP means, let's check a relatable example.
Imagine you invest 5000 every month for 10 years at an equity fund. After 10 years, you have a good collection of savings.
To avoid withdrawing the entire amount at a single time, you can set up SWP with a fixed amount to withdraw monthly.
Pro Tip: Use the SWP Calculator to make the calculation faster and easier.
In this way, you will get a regular income stream for your expenses and long-term financial goals. Hence, this blend of SIPs and SWPs gives you financial freedom.
It's just the beginning, let's explore more about these in the upcoming sections.
How Does Freedom SIP Work?
The process allows you to redeem the regularly invested amount through SWP after SIP overs. This section brings an interesting concept about the process of passive income strategy.
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Determine Regular Investment (SIP)
Choose a set amount to invest on a monthly, quarterly, or other regular basis. This can be accomplished by using a systematic investment strategy. The compounding interest grows the investments gradually over time.
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Select source funds and target funds.
Examine your financial goals (e.g., education, retirement) and risk tolerance. Select the equity fund that aligns with your goals. Also, choose the target (debt) fund that gives you stability.
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Freedom Distribution Plan (SWP)
The fully grown investment after completion of SIP is transferred to a target scheme. You can receive the grown amount regularly through the SWP setup. This systematic redemption setup makes a streamlined income source for you.
Wait here is not the end, there are many things to know about investment freedom. To expand your knowledge on the SIP wealth creation let's explore the next section.
How Does Freedom SIP Benefits the Investors?
This section makes you familiar with the freedom SIP Benefits you will experience from it:
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Goal-oriented investing
The systematic approach of this passive income gives you the consistency of saving regularly. This regular saving helps you to achieve your desired goals.
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Rupee-Cost Averaging
You can invest a fixed amount periodically (daily, monthly). This will help in reducing the impact of market risks and give you a corpus over time.
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Long-term wealth creation
The compounding nature grows your investments gradually over time. By investing in a high-rewarding fund, you will get significant returns.
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Financial Independence
The SWP component helps to generate a streamlined income during retirement. As a result, you will achieve financial security and freedom at that time.
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Tax Efficiency
It is a tax-efficient SIP option that gives potential tax implications on your investments. Hence, you will get the advantage of tax benefits such as long-term gain tax.
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Automated Investing
The automated behavior of SIPs and SWPs makes you hassle-free from manual interventions. This saves you time and effort. Moreover, it helps you plan for various life stages.
Invest in the Best Mutual Funds
With the dual power of wealth creation and stability, you can secure your future. Are you curious to know who wins, freedom SIP Vs normal SIP? Wait, the next section clears your curiosity.
Freedom SIP Vs Normal SIP Comparison: Which is Better?
Freedom SIP is a tailored SIP plan for financial independence. It allows you to invest in a mutual fund scheme through the SIP route for a fixed duration. After the completion of the duration, it allows you to redeem the corpus amount.
Whereas, the normal SIP allows you to invest in Mutual Funds for wealth accumulation. It will gradually increase your investment over time. This route doesn't have any exit strategy. It is easy to manage investment in this route.
For a better understanding, you can go through the table given below.
| Feature | Normal SIP | Freedom SIP |
| Objective | Accumulation of wealth. | Accumulation followed by systematic redemption. |
| Investment Phase | Regular investment for a specific period. | Regular investment followed by an automatic withdrawal phase. |
| Withdrawal Phase | No withdrawal phase. | Withdrawal phase begins after the completion of the accumulation phase. |
| Flexibility | Flexible investment management. | Less flexible due to a predetermined withdrawal plan. |
| Complexity | Simple, easy to understand, and manage. | Involves two phases: SIP for accumulation and SWP for withdrawal. |
With the understanding of the difference between the Freedom SIP and Normal SIP. Let's draw your attention to the next section that brings some new information for you.
Also read: Daily SIP vs. Monthly SIP: Which is Better for You?
Who Should Consider Freedom SIP?
This section brings you knowledge about the criteria for choosing an investment freedom plan. This will help you to understand whether you can go with this smart financial planning tool or not:
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Long-term Financial Planning
This goal-based investment tool gives a regular income stream. If you are planning for retirement, or have long-term goals like your child's education. Then the freedom SIP helps you in wealth creation over time.
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Consistent Investment Growth
This tailored investment plan gives consistent growth. If you belong to an average-income profession and wish for consistency in growth. This smart financial planning tool gives you good earnings.
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Regular Investment Discipline
The systematic approach makes you hassle-free from the manual effort. If you have a hectic schedule. Then freedom SIP helps to automate your investments and avoid impulsive decisions.
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Regular Investors
This investment approach has a pee-cost-averaging journey and want to pursue your passion. This smart financial investment approach mitigates the market risks for you. Also, brings you good net earnings that secure your future.
With a detailed discussion of the low-risk SIP strategy. Let's wrap up and take a quick review of it.
Final Words
In short, if you are looking for an effective and fast way to wealth creation, choosing the freedom SIP is a great alternative. It offers you a perfect blend of growth from SIPs, giving compounded returns with a regular source of income from a systematic withdrawal plan or SWP.
So, if you are looking for a simple, smart and stress-free way to take charge of your financial future, freedom SIP is the best strategy you need to unlock the financial freedom you’ve been aiming for. Ensure your regular pension during retirement using this versatile tool. And let your finances fly high and reach new heights.
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