Investing in mutual funds is considered as a smart way to grow your money as it offers a balanced approach for both beginners and seasoned investors. Mutual funds offer several key advantages to investors. Firstly, they provide instant diversification, as an investor's money is spread across numerous securities, reducing the overall risk exposure.
Secondly, they are managed by experienced professionals who have the expertise and resources to conduct thorough research, analyze market trends, and make informed investment decisions on behalf of the fund's shareholders.
Another notable benefit of mutual funds is their liquidity. Investors can easily buy or sell their fund shares at the current net asset value (NAV), which is determined at the end of each trading day. This liquidity allows for convenient entry and exit points, making mutual funds a flexible investment option.
Furthermore, mutual funds offer various investment objectives and strategies to cater to different investor goals and risk appetites. Some funds may focus on growth, income generation, or a combination of both, while others may specialise in specific sectors, industries, or geographical regions.
One of the best investment formulae is 15x15x15 Rule of Mutual Funds. If investors aim to earn Rs 1 crore in the near future, this rule can be a good attempt to achieve your goal.
What is 15-15-15 Rule?
The rule says to achieve the goal of earning Rs 1 crore, an investor should invest Rs 15,000 monthly through SIP for 15 years, considering a 15% annual return from an equity fund. Consistent adherence to this strategy can lead to significant wealth accumulation. This can be easily achieved if one is consistent in their SIP investment.
Investment for 15 years
Utilising the SIP calculator, an investment of Rs 15,000 monthly over a duration of 15 years results in a total capital outlay of Rs 27,00,000. Assuming an annual return of 15%, the projected long-term capital gains are estimated to be Rs 74,52,946. After 15 years, you will get a total of Rs 1,01,52,946.
Compounding in Mutual Funds
Compounding is a crucial aspect to understand when it comes to investing in Mutual Funds. This strategy involves investing a small amount of money regularly, which then grows over time into a larger sum through the power of compounding.
Essentially, compounding allows your initial investment to earn returns, which are then reinvested to generate even more returns in the future. By reinvesting earnings within the same investment timeframe, the compounding effect amplifies the value and profitability of your investment.
This concept forms the basis of many investment opportunities, making it essential to maximize gains by investing in mutual funds promptly and consistently. The idea of compounding highlights the importance of starting early and staying committed to long-term investment goals in order to see significant growth in wealth over time.
Equity funds: Large cap vs Mid cap vs Small cap
Many equity funds, encompassing short-, mid-, and small-cap categories, have achieved annual returns exceeding 15 per cent over the past decade. Consequently, sustaining a 15 per cent return annually for a duration of 15 consecutive years is a feasible outcome.
Investment plan
Investors may opt for a single mutual fund Systematic Investment Plan (SIP) or diversify across multiple SIP schemes to allocate their capital. Strategic investment planning is essential to attain the objective of amassing Rs 1 crore.
Diversification can be achieved by selecting various mutual fund SIPs from different categories such as equity, debt, and hybrid, which helps in mitigating risk associated with market volatility. It is recommended to consult with a professional fund manager to effectively navigate towards reaching the financial goal of Rs 1 crore.
Mutual funds in FY24
The assets under management (AUMs) for the domestic mutual funds industry increased nearly Rs 14 lakh crore to a record Rs 53.40 lakh crore as of March 2024 compared with Rs 39.42 lakh crore as of March 2023, AMFI's annual report stated. In FY2024, the equity-oriented mutual fund categories grew by 55% in fiscal 2024 to Rs 23.50 lakh crore.
FAQs
What is 15-15-15 Rule? The rule says to achieve the goal of earning Rs 1 crore, an investor should invest Rs 15,000 monthly through SIP for 15 years, considering a 15% annual return from an equity fund. Consistent adherence to this strategy can lead to significant wealth accumulation.
What is the 15 15 rule of mutual funds? ›
Meaning of the 15-15-15 rule in Mutual Funds
The Investment: You should invest Rs 15,000 per month. The Tenure: The total of your investment should be 15 years. It means that you will invest Rs 15,000 every month for the next 15 years. The Return: Your expected returns on your investment should be 15%
What is the 15-15-15 formula? ›
What is the “15*15*15 Rule” in Mutual Funds? Consider investing Rs 15,000 per month for 15 years and earning 15% returns. After 15 years, the total wealth will be Rs 1,00,27,601 (Rs. 1 crore).
How to get 1 crore in mutual fund? ›
15-15-15 rule to make Rs 1 crore from mutual funds
Assuming an equity fund offers a 15% annual return, you would need to invest Rs 15,000 per month via SIP for 15 years to achieve your goal of reaching Rs 1 crore.
How to make 1 crore by investing 5000 per month? ›
If you continue with your investments for a long time, you can easily become a crorepati. In 26 years, you can accumulate a Rs 1 crore corpus if you begin investing Rs 5,000 per month in mutual fund SIP. Here the interest rate, let's assume, remains constant at 12 per cent per annum.
What is the 15 15 rule? ›
The 15-15 rule—have 15 grams of carbohydrate to raise your blood glucose and check it after 15 minutes. If it's still below 70 mg/dL, have another serving. Repeat these steps until your blood glucose is at least 70 mg/dL.
How does the rule of 15 work? ›
The Rule of 15 says: if your blood sugar drops below 70 mg/dL (milligrams per decilitre), eat a snack that has 15 grams of rapid acting carbohydrates. After 15 minutes, recheck your blood sugar. Did it increase to a safe level? If so, you're in the clear.
How much SIP for 1 crore in 15 years? ›
The rule says to achieve the goal of earning Rs 1 crore, an investor should invest Rs 15,000 monthly through SIP for 15 years, considering a 15% annual return from an equity fund. Consistent adherence to this strategy can lead to significant wealth accumulation.
What happens if I invest $10,000 a month in SIP for 15 years? ›
So, assuming an investor invests ₹10,000 per month for 15 years, maintaining 10 per cent annual step up, mutual funds SIP calculator suggests that one's SIP of ₹10,000 would yield ₹1,03,11,841 or ₹1.03 crore.
Can we get 15% return SIP? ›
Systematic Investment Plan (SIP) over a 15-year period can vary depending on factors such as market conditions, fund performance, and the specific investments made. So, historically, SIPs have delivered an average annual return of around 12-15%, although past performance is not indicative of future results.
You aim to invest approximately Rs 20,000 every month towards achieving your Rs 1 crore target. The timeline to reach this goal depends significantly on the returns you earn. While calculating, it is wise to consider the lowest expected returns to achieve realistic expectations.
How much should I invest in SIP to get 10 crore in 10 years? ›
How to accumulate a Rs 10 crore corpus in 10 years? Assuming an expected return rate of 12 per cent per year, an investor would need to invest Rs 4.34 lakh per month in equity funds through SIP to create a corpus of over Rs 10 crore in 10 years.
How to get 50 lakhs in 5 years with SIP? ›
For example, if an individual plan to accumulate ₹50 lakhs over the tenure of 5 years, assuming the individual invests in a Flexicap fund or a Multicap fund which is giving an annualized return of 15%, then the individual needs to invest ₹55,750 per month for 5 years in order to generate the required corpus.
How much is $5000 for 5 years in SIP? ›
How much is Rs. 5,000 for 5 years in SIP? If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.
What if I invest $5000 a month in SIP for 3 years? ›
A monthly SIP of Rs. 5000 for 3 years would have become Rs. 2.38 Lakhs from the total of Rs. 1.8 Lakhs invested over the time period.
Which SIP is best for $2000 per month? ›
Equity Linked Saving Scheme (ELSS) funds are tailored to provide tax benefits under Section 80C of the Income Tax Act, with a lock-in period of 3 years. The DSP ELSS Tax Saver Fund exemplifies a compelling option for investing an SIP of 2000 for 10 years or more.
What if I invest $1,000 a month in mutual funds for 20 years? ›
If you invest Rs 1000 for 20 years , if we assume 12 % return , you would get Approx Rs 9.2 lakhs. Invested amount Rs 2.4 Lakh.
What is the 75 5 10 rule for mutual funds? ›
Diversified management investment companies have assets that fall within the 75-5-10 rule. A 75-5-10 diversified management investment company will have 75% of its assets in other issuers and cash, no more than 5% of assets in any one company, and no more than 10% ownership of any company's outstanding voting stock.
What is the 3 5 10 rule for mutual funds? ›
Specifically, a fund is prohibited from: acquiring more than 3% of a registered investment company's shares (the “3% Limit”); investing more than 5% of its assets in a single registered investment company (the “5% Limit”); or. investing more than 10% of its assets in registered investment companies (the “10% Limit”).
What is the 80 20 rule in mutual funds? ›
Investing. When it comes to investing, the 80/20 rule asserts that 80% of your investment returns — or losses — come from only 20% of your assets.
