Mutual fund investment: The volatility of the stock market has caused many people to consider investing in mutual funds as a more stable option. Stories of funds producing significant returns of 10x or 20x over an extended period of time have captured the attention of potential investors. However, it is essential to remember that mutual fund investments come with their own set of risks associated with market fluctuations.
Despite the potential for high returns, there is always a possibility of losing money in the market. It is crucial for investors to do thorough research and consult with financial advisors before jumping into mutual fund investments to ensure they are making informed decisions. Overall, while the allure of high returns may be tempting, it is important to approach investing in mutual funds cautiously and with a well-thought-out plan.
15–15–30 rule
The 15x15x30 rule of mutual funds involves investing Rs 15,000 per month for a period of 30 years in a fund that offers a 15% annual return. As per experts, this can give the investor an opportunity to accumulate Rs 10 crore against 1 crore.
For those who are in their 20s/early 30s, they have a long working life before they retire. They can target accumulating Rs 10 crores by starting with a Rs 15,000/- SIP in an asset class which can give them 15% return. If you are someone who has the capacity to invest much higher you can use the above thumb rule to know the amount that you will be able to accumulate. So, if you can invest Rs 1.5 Lakh (10x of Rs 15K) as SIP, you will be able to generate Rs 100 Crores (10x of Rs 10 Crores) at 15% p.a. in 30 years. If your capacity is to invest Rs 60K (4x of ₹15K), you will be able to generate Rs 40 crore (4x of Rs 10 crores) and so on," said Jay Shah, Founder and CEO-Finwisor
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.
The compounding effect
Compounding, when applied to mutual fund investments, describes the process by which small initial amounts can grow substantially over an extended period. Specifically, the returns generated in one compounding period subsequently generate additional returns in subsequent periods, effectively accelerating growth over time.
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.
Points to note
Shah said investors should keep certain things in mind to build a robust corpse
> Discipline: Practically, this is where most people fall short. Investing consistently for 30 years requires you to maintain faith and keep investing even when markets are going through tough times.
> Asset class: The above thumb rule assumes a growth of 15% p.a. Selection of an asset class that can give you such returns is critical. Ideally one needs to invest in equities/equity MFs for the same.
> Returns: For generating higher returns, either put in the hard work to understand the investing game well or rely on experts who have been there done that.
> Risk: In trying to maximize your returns, be aware of your risk appetite. Only take risks that you can swallow if things go wrong.
Disclaimer: The views and investment tips by investment experts are their own and not that of Business Today. Readers are encouraged to consult a qualified financial advisor or a SEBI-registered investment advisor before making any investment decisions.
FAQs
The 15x15x30 rule of mutual funds involves investing Rs 15,000 per month for a period of 30 years in a fund that offers a 15% annual return. As per experts, this can give the investor an opportunity to accumulate Rs 10 crore against 1 crore.
What is the 15x15x30 rule? ›
15x15x30 rule in mutual funds is strategy to invest Rs 15,000 per month for 30 years in a fund that offers a 15% annual return. According to some experts, this strategy can help an investor accumulate Rs 10 crore over 30 years, compared to Rs 1 crore if they invested for 15 years.
What is the 15 15 15 rule for 1 crore? ›
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 10 crore? ›
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 1 crore in 10 years? ›
To earn 1 crore from mutual fund investment in 10 years (annual return is 12%), you need to invest Rs 44,640 every month for the entire tenure. If you can extend the investment horizon by five more years to 15 years, you have to invest Rs 21,020 a month.
What is the 15c3 rule? ›
Rule 15c3-3 applies to all registered broker-dealers. It governs the custody and use of customer-owned securities and funds held by brokerages. The rule requires brokerages to have physical possession of customers' securities. Those paper stock certificates or other items need to be kept in a safe place.
What is the 90404 rule? ›
All relevant evidence is admissible, except as otherwise provided by the constitutions of the United States and the state of Wisconsin, by statute, by these rules, or by other rules adopted by the supreme court. Evidence which is not relevant is not admissible. History: Sup.
How much should I invest in SIP to get 1 crore in 15 years? ›
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.
How to make 1 crore corpus? ›
Best investment options to earn Rs. 1 crore in 5 years
- Mutual Funds.
- Exchange-traded funds (ETFs)
- Stocks.
- Bonds.
- ULIP Plan.
Even with higher returns, an incremental investment of Rs 25,000 per month (monthly SIP of Rs 60,000) will be required. However, if you continue to invest for 15 years, providing more time for compounding, you can amass around Rs 2.2 crore with your original investment.
Our Partners. If you want to earn a substantial amount as the interest per month on a fixed deposit of ₹10 Crores, you may choose the monthly payout option. Your payout can go up to ₹7.5 Lakhs at an interest rate of 9% over a tenor of 5 years. This can serve as a steady stream of income that you can use as you like.
Can I retire at 40 with 1 crore in India? ›
Adhil Shetty, CEO of Bankbazaar.com, says, “Retiring with a corpus of over Rs 1 crore is achievable with early planning and disciplined investing. By leveraging the power of compounding, diversifying your portfolio, and periodically increasing your investments, you can build a substantial retirement fund.
Is 10 crore rich in India? ›
He classified people with Rs 1 crore of liquid net worth in the “rich” category, while a High Net Worth Individual (HNI) need to have liquid assets worth Rs 10 crore or more.
How many US dollars is one crore? ›
Hence, there are approximately 120,382 US Dollars in 1 Crore Indian Rupees. This conversion provides a perspective on the value of a large sum in Indian currency when expressed in US Dollars, a widely used international currency.
How long will 1 crore last in India? ›
Inflation. The purchasing power of money varies with the effects of inflation. Today, you may feel that 1 crore is sufficient to live for 10 years after retirement. However, you must take into account the impact of inflation, especially over many decades of retirement.
How much to invest to get 10 crore in 30 years? ›
The 15x15x30 rule of mutual funds involves investing Rs 15,000 per month for a period of 30 years in a fund that offers a 15% annual return.
What is the Popoff's rule? ›
Popoff's rule states that during the oxidation of an unsymmetrical ketone, the cleavage of the C−CO bond is such that the keto group always stays with the smaller alkyl group.
What is the SEC rule 15c3 3 K 2 I exemption? ›
SEC Rule 15c3-3 & Exemptions for Broker Dealers
(k)(2)(i) – This exemption applies to broker dealer firms that do not carry margin accounts and promptly transmit all customer funds received.
What is Gartenberg rule? ›
Gartenberg held that mutual fund management fees would violate Section 36(b) only if fees were “so disproportionately large that they could not have been the result of arm's-length bargaining.” Gartenberg, which was decided by the Second Circuit Court of Appeals in 1982, has been widely followed by the federal courts.
What is the 20410 rule? ›
First and foremost, the 20/4/10 rule is not a law. It's more like general guidelines and a way to plan for vehicle expenses. Basically, the rule goes that you provide a down payment of 20% of the balance, sign a loan for a four-year period, and pay no more than 10% of your monthly income on car expenses.
