All you need to know about 15 15 15 rule

What’s that dream figure that can enable you to retire early? For Arun, who is planning to go back to his village after retirement, it’s Rs. 1 crore. When he told his friends that he plans to amass that amount of money in 15 years by investing Rs. 15,000 a month, a lot of people said it was impossible, but he had math on his side. He took refuge in the 15x15x15 rule to plan and calculate his investment to reach his dream figure. But what is the 15x15x15 rule and how does it work? Let’s follow Arun’s journey to understand it better. 

What is the 15 15 15 rule?

To understand the 15 15 15 rule, you first need to understand compounding and the power it has. It is a phenomenon that makes your regular investments give higher returns over time, and it is extensively used with investments like mutual funds. The idea here is that as you earn a profit every month or year, that profit is added back to the capital and in the next term, you earn a profit on that compounded amount. With time, this can give your capital significant growth which in turn can give you higher returns.

Let’s take an example to understand this better. Suppose you invest Rs. 1 lakh in a mutual fund that gives 12% returns per annum.

Capital at the end of the first year/ at the beginning of second – Rs. 1,12,000

Returns in the first year – Rs. 12,000

Capital at the end of the second year – Rs. 1,25,440

Returns in the second year alone – Rs. 13,440

Here, you can see that the profit increased even when the returns stood the same, thanks to the power of compounding. 

Compounding and the 15 15 15 rule

The 15 15 15 rule utilises the power of compounding to help you make a crore. It says that if you invest Rs. 15,000 per month for 15 years in a security or fund that gives 15% returns per annum, you can amass Rs. 1 crore at the end of that term. This is what could help Arun earn his dream crore so that he could peacefully retire. But where can he invest to achieve this? Let’s learn. 

Mutual fund for 15 years

Mutual funds are one place where it could work. For the 15 * 15 * 15 rule of mutual funds to work, you will need to invest Rs. 15,000 per month in a fund that gives a 15% return for a time period of 15 years. Now, market investments are volatile, and it could often get unpredictable and there is no guarantee that your mutual fund investment will give you a 15% annual return every year. Instead, what could help the 15 * 15 * 15 rule of mutual fund to work is finding a fund that can give you returns regularly in the 14% to 16% range. If you do this, offsets in weaker years could be corrected by higher returns in good years. Through this, you can invest to earn an amount close to Rs. 1 crore in 15 years. 

Making your crore by following the rule

One crore could be enough for some people, like Arun, to peacefully retire while some others would require much more. But it doesn’t matter what side of the line you’re on, making one crore is a big financial achievement and mutual funds are something that could help you make it happen. Use the 15 * 15 * 15 rule in mutual funds and begin the work towards making your first crore today!


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