You Can Earn 1 Crore with 15-15-15 Mutual Fund Rule?
Is it possible to earn Rs.1 crore by investing in a Mutual Funds SIP? If there’s a chance to achieve such substantial returns, it’s worth exploring right, so the answer you are looking for is Yes it is possible to earn a crore by following 15-15-15 mutual fund rule. Let’s delve into this mutual fund strategy and see how you can potentially reach such a significant amount and fulfill your financial goals.
What is 15-15-15 Mutual Fund Rule of Investing?
The 15-15-15 rule is an easy way to reach your long-term financial goals using Mutual Funds. It works on the idea of compounding, where you earn interest on your earnings. To follow this rule, invest 15% of your income each year in mutual funds that give a 15% compound annual return, and keep investing for 15 years. Next is to understand about the power of compounding.
What is the Compounding Effect on Mutual Funds?
Compounding is key to the success of mutual funds as it helps small, regular investments grow into large amounts over time. When you reinvest the money you earn, it continues to earn more interest. To make the most of compounding, it's best to start investing early. The sooner and more consistently you invest in mutual funds, the more your money can grow over the years.
The 15-15-15 Rule: Your Key to Achieve 1 Crore
Let’s understand with the example of Step UP SIP:
Imagine, if your total income is Rs. 33,334, then 15% of this amount is Rs. 5,000. This means you can start a Systematic Investment Plan with an initial investment of Rs. 5,000 per month. By investing this amount monthly and achieving an annual compounded return of 15% over 15 years, you can leverage the power of compounding to potentially grow your investment significantly over time.
| Year | Monthly Investment (₹) | Total Annual Investment (₹) | Estimated Corpus (approx.) (₹) |
|---|---|---|---|
| 1 | 5,000 | 60,000 | 60,000 |
| 2 | 5,750 | 69,000 | 1,13,000 |
| 3 | 6,613 | 79,356 | 1,75,000 |
| 4 | 7,605 | 91,260 | 2,55,000 |
| 5 | 8,765 | 1,05,180 | 3,56,000 |
| 6 | 10,074 | 1,20,888 | 4,83,000 |
| 7 | 11,581 | 1,38,972 | 6,39,000 |
| 8 | 13,250 | 1,59,000 | 8,28,000 |
| 9 | 15,137 | 1,81,644 | 10,55,000 |
| 10 | 17,198 | 2,05,992 | 13,23,000 |
| 11 | 19,457 | 2,32,920 | 16,36,000 |
| 12 | 21,925 | 2,62,980 | 20,00,000 |
| 13 | 24,628 | 2,95,536 | 24,24,000 |
| 14 | 27,597 | 3,30,564 | 29,22,000 |
| 15 | 30,860 | 3,69,720 | 35,14,000 |
Year-by-Year Breakdown:
In the first year, you invest Rs. 5,000 each month, totaling Rs. 60,000 for the year.
In the second year, you increase your monthly investment by 15% to Rs. 5,750, resulting in a total annual investment of Rs. 69,000.
By the third year, you further raise your monthly investment by 15% to Rs. 6,613, which brings the total annual investment to Rs. 79,356. It goes on. After 15 years of following this strategy, your monthly investment will have increased by 15% each year.
With this Step Up SIP plan and a 15% annual return, your investment could grow to approximately Rs. 1.5 crores. This method lets you start with a manageable amount and gradually increase it, using the power of compounding to achieve significant growth over time.
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5 Best Mutual Funds for 15% CAGR Returns
| Scheme Name | Launch Date | AUM (Cr) | 3 Yrs Returns | 5 Yrs Returns |
|---|---|---|---|---|
| ICICI Pru Bluechip Fund | 05-05-2008 | 59,335 | 21.63% | 20.68% |
| Parag Parikh Flexi Cap Fund | 05-05-2013 | 71,670 | 18.92% | 25.60% |
| Nippon India Multi Cap Fund | 25-03-2005 | 34,899 | 31.10% | 25.35% |
| SBI Contra Fund | 14-07-1999 | 34,317 | 28.53% | 30.60% |
| ICICI Pru Multi Asset Fund | 31-10-2002 | 43,887 | 23.40% | 21.03% |
Advantages of the 15*15*15 Rule in Mutual Fund
Here are some advantages of using the 15-15-15 rule in Mutual Funds:
- Structured Investing: The 15-15-15 rule of mutual funds offers a systematic investment approach to investing, helping you avoid impulsive decisions.
- Clear Goals: It forces you to set specific financial targets, making it easier to plan and invest wisely.
- Risk Awareness: By defining a fixed investment and return rate, you gain a better understanding of potential earnings and associated risks.
- Financial Discipline: Committing to a regular investment fosters discipline, which is crucial for making sound financial choices.
- Long-Term Focus: The rule promotes a long-term perspective, encouraging you to focus on your financial goals rather than short-term market changes.
- Compounding Benefits: Regularly reinvesting your earnings leverages compounding, leading to significant growth over time.
- Progress Tracking: It allows you to monitor your progress toward financial goals, keeping you motivated and on track.:
The 15-15-15 rule is an effective strategy for achieving long-term financial goals through disciplined, systematic investing and compounding.
Final Words
The 15-15-15 rule is an effective strategy for reaching long-term financial goals through mutual fund investments. By starting with a manageable monthly SIP and increasing it annually, you can take advantage of compounding to grow your investments significantly. This method encourages regular investing, financial discipline, and a focus on long-term growth. Start your SIP journey today to secure your financial future.