SIP Investment, 15x15x15 Formula: How Investing Rs. 15K Monthly Can Build a Corpus of Over Rs. 1 Crore in 15 Years

One of the major advantages of SIP (systematic investment plan) investments over lump sum investments in mutual funds is the ability to start small. You can start with a small SIP contribution of ₹500 per month, only to gradually increase your SIP contributions over time and earn more. You can use the popular 15x15x15 formula to build a corpus of ₹1 crore in 15 years by investing ₹15,000 monthly.Seems exaggerated? Check the calculation for yourself!

How do SIP mutual fund investments work?

A brief overview of how SIP and mutual fund investments work can help youunderstand the calculation better. If you choose the SIP mode of investment in a mutual fund scheme, you invest a fixed amount into a mutual fund regularly and gradually increase your contributions over time. You can make these contributions online and can check your future mutual fund returns before making your investment by using a mutual fund returns calculator.

Investing ₹15,000 monthly to build a corpus of more than ₹1 crore in 15 years

You can achieve the above-mentioned goal by following three simple steps – following the 15x15x15 rule, using an online SIP returns calculator,and stepping up your monthly SIPs. Here is how you can do it –

1. Follow the 15x15x15 rule:The 15x15x15 rule of investing in mutual fund schemes tells us that an investor can expect an average SIP return of 15% through mutual fund investments via SIPs for 15 years. The rule expects the investor to invest ₹ 15,000 monthly for this period. SIPs leverage the power of compounding to help investors earn more than ₹1 crore in 15 years’ time. SIPs are the most convenient way to invest in such a scheme as they help the investor develop an investment discipline over a sustained period.

• Use an online SIP returns calculator:Online SIP return calculators are free online tools that help investors know the value of their SIP returns before investing in a mutual fund scheme. These tools take three inputs – the total amount of one’s financial goal, the expected rate of return, and the investment horizon. You can know, by providing these details, how much you should be investing every month to reach your investment goal. These online tools also account for factors such as inflation while giving you an estimate of your future SIP amount.

• Step up your SIP contributions:The value of any investor’s financial goals is subject to change over time. The value of one’s higher education, for instance, might change in a few years due to inflation. This is true for every financial goal. You must therefore look to increase your SIP contributions by a fixed amount or percentage after a few months or years. A step-up SIP calculator can help you decide on your ‘step-up SIP amount’. These, too, are online, and free for use.

• Reassess your SIP investments and make changes if necessary:Form the habit of continuously assessing the performance of your mutual fund investments with respect to your financial goals. If you feel that a particular mutual fund investment does not align well with your financial goals, you must look to increase your regular SIP contributions towards that fund. Reassessing your funds also helps you understand the overall risk of your investment portfolio, which helps you take measures to mitigate this risk.

In conclusion, it is possible for most investors to build a corpus of more than ₹1 crore in 15 years by investing ₹15,000 monthly in a mutual fund investment via SIPs. You should follow the 15x15x15 rule, use an online SIP returns calculator, step up your SIP contributions, and reassess your SIP investments regularly.