If your objective is to amass Rs 1 crore through mutual fund investments, a straightforward guideline can assist you in achieving this goal over the long term. The 15-15-15 mutual fund investing principle provides insight into the necessary monthly savings, the duration of investment, and the expected growth rate to reach the target amount of Rs 1 crore.
While stock markets are inherently volatile, historical trends indicate a general upward trajectory over extended periods. Although achieving a consistent annual return of 15 percent in the equity market may be challenging, it is feasible to attain an annualized return of approximately 15 percent over the long term.
The 15-15-15 investing principle
The number ’15’ appears three times in this rule, representing the growth rate, investment duration, and monthly savings amount. If you can secure a 15 percent annualized return over a span of 15 years, you would need to invest Rs 15,000 each month to accumulate a total of Rs 1 crore.
In essence, by contributing Rs 15,000 monthly for 15 years at an anticipated annualized growth rate of 15 percent, you can achieve the target of Rs 1 crore.
Estimated Corpus – Rs 1 Crore
Total Investment – Rs 27 Lakh (over 15 years)
Total Gain – Rs 73 Lakh
This rule serves as a basic framework to initiate long-term savings. If you are comfortable with an annualized return of 12 percent, consider utilizing a Step-up SIP to build a larger corpus. It is advisable to calculate inflation-adjusted savings requirements for your specific goals before commencing your investment journey.
Benefits of the approach
The 15-15-15 mutual fund rule emphasizes two essential aspects: the systematic investment plan (SIP) method of investing and the advantages of compounding for the investor. Adhering to the 15-15-15 mutual fund investing principle fosters a savings habit. It also mitigates the impact of market volatility, as units are acquired through SIP. This approach eliminates the temptation to time the market, allowing for additional investments into the same SIP folio during significant market downturns.