Becoming rich is everyone’s dream, but more so at the bottom and lower-middle section of the economic pyramid. And whenever the discussion again getting rich heats up, Rs 1 crore is till used as a benchmark of getting well off.
Mutual funds 15X15X15 formula
The 15X15X15 rule of mutual funds is a guidance of amassing Rs 1 crore in a relatively short period of time without putting one’s pocket into too much stress.
The 15x15x15 rule is very simple. It says that if an investor puts in Rs 15,000 every month in equity mutual funds and continues it for 15 years, he/she can create a corpus of Rs 1 crore (actually Rs 1.01 crore) since equity mutual funds can fetch a return of 15% over 15 months.
The total nominal investment in 15 years = 15 X 12 X Rs 15,000 = Rs 27,00,000
Therefore, the gain in 15 years comes to about Rs 74,00,000.
Now, let’s try to play around with this formula. Just keep the SIP amount every month unchanged at Rs 15,000. Let’s also keep the expected rate of return unaltered at 15%. Just raise the period of investments to 20 years instead of 15, and believe it or not, the amount more than doubles in the next 5 years.
The total amount of money that your SIP would generate would be above Rs 2.27 crore.
SIP calculator
All major banks such as SBI, HDFC, Axis, ICICI, PNB and NBFCs offer free SIP calculators on their websites.
There are two direct lessons from this rule. One the sooner in life one can start investing, the sooner one can reap the benefits.
The other rule, compounding packs a humongous power that is unleashed to the full if one allows a long period of time to the investments to work without interruption.
For example, if one can start SIP according to the formula above at the age of 30, he/she can achieve the Rs 1 crore mark by 45, when the investor can redeem to realise his financial dreams, or if his pocket permits, continue to build on this solid foundation.
Therefore, the 15X15X15 rule allows one to become a crorepati in 15 years flat assuming he/she even starts from scratch.
However, choosing mutual fund schemes for investment according to one’s needs is a tricky business and should be done after consultation with a qualified investment advisor.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
What is 15x15x15 Rule In Mutual Funds? This formula is commonly used to illustrate how easy it is for an investor to amass Rs 1 crore. The only point is he/she has to keep investing over a period of time. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
