15-15-15 Rule in Mutual Funds: The “15-15-15 rule,” a simplified approach that provides a mechanism to possibly accumulate a corpus exceeding Rs 1 crore in 15 years through disciplined Systematic Investment Plans (SIPs), is becoming more and more popular among mutual fund investors.

What is the 15-15-15 Rule?
⦿ Invest 15,000 rupees every month regularly.
⦿ over 15 years
⦿ With an assumed annual return of 15% in equity mutual funds.
⦿ With these calculations, the total amount will be around 27 lakhs, and including the interest, this amount is going to be approximately around 1 to 1.2 crores by 15 years.
⦿ If you keep up the same SIP for another 15 years (totaling 30 years), reinvesting and earning about 15% a year, the corpus may grow to over Rs10 crore, which would mean that an investment of Rs54 lakh would produce returns of about Rs9–9.4 crore.

Power of Compounding:
The rule shows the exponential advantage of compounding, in which gains lead to gains. The majority of reliable studies and financial websites emphasize that this exponential phase quickens with time, particularly after 15 years.

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Market Risks and Inflation:
⦿ Returns are not assured: Taking on equities market risk is necessary to regularly generate returns of 15% annually. Over 15 years, not all mutual funds provide that.
⦿ Market volatility: The SIP journey may be interrupted by brief corrections. Compounding gains are undermined by the early exit of many investors.
⦿ Inflation erosion: After 15 years, even if you make Rs 1 crore, inflation of 5–6% may make it feel like Rs 45–50 lakh in today’s purchasing power.

More strategies for good investment:
1. Realistic Expectations:

Indian equities indices, such as the Sensex and Nifty, have a long-term historical average of 12% to 15% annually throughout 15 to 20 years.  To increase corpus while controlling risk, some experts advise taking a more cautious approach and aiming for a 10-12% CAGR in conjunction with step-up SIPs (progressively increasing monthly investments).

2. Don’t Panic Exit When Market is Down:
Many investors make the common mistake of stopping SIPs and exiting early during downturns. Even in volatile times, staying consistent helps them achieve the benefits of compounding returns.

3. Diversification of Money:
If you invest only in equity funds, you expose yourself to market volatility. You can reduce drawdowns and preserve capital by building a well-balanced portfolio that includes debt or hybrid funds. Before investing, carefully assess the portfolio composition, turnover, fund manager’s track record, Sharpe ratio, and expense ratio.

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