People who see the investment side of things have a persistent thought in their minds: “How can I build wealth slowly without taking too much stress?”
But it is often immediately shut down by another thought that says, “No pain, no gain.” While the sentiment behind “no pain, no gain” may be true in many areas of life, in mutual funds there is a way to invest and grow wealth without constant stress or tension. The 15x15x15 rule exists precisely to help you do just that.
What Is the 15x15x15 Rule?
The 15x15x15 rule means investing ₹15,000 every month for 15 years, assuming an average annual return of 15 percent. If you stay consistent by implementing this rule, you can build a return of around ₹1 crore or more.
This rule is commonly explained using equity mutual funds because, historically, good equity funds have delivered around 12 to 15 percent long term returns. Returns are not always guaranteed, but rest assured there is big chance of success power of disciplined investing and compounding.
Let Us Understand it Using Simple Math
Based on the rule you invest about 15000 rupees per month and per year that would be 180000. If you invest it over a period of 15 years it is 27 lakh. With the power of compounding at 15% annual return, your total value can grow to around ₹1 crore or slightly more.
What Is Compounding?
Compounding means: You earn returns on your returns.
In Year 1: You invest and earn returns.
In Year 2: You earn returns not only on your investment, but also on last year’s profit.
In Year 3: You earn on the investment + Year 1 profit + Year 2 profit.
This keeps growing like a snowball. The longer you stay invested, the faster the snowball grows. That is why 15 years is important in this rule.
Why is 15 Years used as a measurement?
Because equity mutual funds need time, markets go up and down during the investment period. However, you should not panic during such events and exit early. Stay invested, because upturns happen along with downturns.
In the long term, markets usually grow along with the economy. Five years gives your money enough time to handle market volatility and benefit from economic growth.
Why ₹15,000?
There is no magic in ₹15,000 specifically. It is used because it is realistic for middle-class investors, as it is neither too big nor too small, and it shows a meaningful compounding effect over time.
₹15,000 means ₹500/- daily. It was like a small daily expense, so investing ₹15,000 was a very comfortable amount for today’s times.
If you cannot invest ₹15,000, you can start with a smaller amount and earn returns based on that investment. The principle does not change at all; only the return on investment varies according to the amount invested.
Is 15% Return Guaranteed?
No. A very important point to remember so pay attention. Mutual funds are safer than other investment options but it doesn’t give you a 100% guarantee. The 15% is just an example based on historical long-term performance of good equity mutual funds.
In reality: Some years may give 20%, 10%, 8%. Over long periods, equity markets have historically delivered around 12% to 15% annually.
Conclusion
The 15x15x15 rule means you invest ₹15,000 per month for 15 years at an average return of 15%, and you can build around ₹1 cr.
You do not need to be a financial expert to start, but guidance from a mutual fund advisor can help you succeed more effectively.
Get in touch with ProfitsZone MFD today and start your investment journey.