Remember the excitement when you began your first SIP, opened your Demat account, or bought your initial stock? They all share a common thread: the desire to become a crorepati, driven by the fear of missing out (FOMO).
Let me share some staggering data with you that will completely transform your thoughts on this. In the year 2023-24, 3.7 crore demat accounts were added, an unprecedented increase of more than 30 lakh accounts per month.
This incredible expansion was fostered by a bullish market rally. Even the benchmark indices, the Sensex and Nifty50, soared by 24.85% and 28.61%, respectively, while the broader BSE Midcap and Smallcap indices increased by 63.4% and 60% in FY 24.
In investing, the desire to accumulate substantial wealth is universal. Many people aspire to become crorepatis (those with a net worth of ₹1 crore or higher).
To help you on your path to becoming a crorepati, we’ve created this informative article on the 15x15x15 Rule. Here, we’ll go over everything you need to know about this popular formula, as well as the challenges you may face on your way to fulfilling your dream of becoming a crorepati.
The 15x15x15 Rule: A Strategic Approach
The key power that makes the 15x15x15 rule functional is investments under SIP (Systematic Investment Plan). Technically speaking, “Compounding” in Mutual Fund Investments is a unique mathematical process that helps small amounts grow to a significant corpus when the investment is allowed to rest for a longer period. The 15x15x15 rule fundamentally works on three defined principles- Investment Value, Period of Stay, and Anticipated Yield.
Investment Value: Begin by investing ₹15,000 per month via SIP. Over time, this consistent contribution builds the foundation of your wealth journey.
Period of Stay: Commit to this disciplined approach for 15 years. Patience is your ally; allow compounding to work its magic.
Anticipated Yields: Aim for an average annual return of 15%. While markets fluctuate, a long-term horizon smoothens out the volatility.
How It Works
Imagine you diligently invest ₹15,000 every month for 15 years, expecting a 15% annual return. Here’s what happens:
| Tenure | Invested Corpus (in Rs.) | Estimated Return (in Rs.) | Total Corpus (in Rs.) |
| 5 years | Rs. 9,00,000 | Rs. 4,45,225 | Rs. 13,45,225 |
| 10 years | Rs. 18,00,000 | Rs. 23,79,859 | Rs. 41,79,859 |
| 15 years | Rs. 27,00,000 | Rs. 74,52,946 | Rs. 1,01,52,946 |
| 20 years | Rs. 36,00,000 | Rs. 1,91,39,325 | Rs. 2,27,39,325 |
| 30 years | Rs. 54,00,000 | Rs. 9,97,47,309 | Rs. 10,51,47,309 |
After 15 years, your corpus grows to approximately ₹1 crore.
But the real magic happens in the subsequent 15 years. By continuing the same disciplined approach, your wealth multiplies exponentially, reaching around ₹10 crore.
Significance of Compounding in Mutual Funds
Compounding is when your investment generates returns, and those returns, in turn, generate more returns. Let’s make it simple, consider-
Initial Investment: Imagine you invest a sum of money (say, in a mutual fund). This initial investment becomes the seed for future growth.
Returns: Over time, your investment earns returns—interest, dividends, or capital gains. These returns are reinvested back into the same investment vehicle.
Reinvestment: The magic happens when you reinvest those returns. They start earning their own returns, creating a compounding effect. Essentially, you earn interest on your interest!
Mutual funds are ideal for compounding because they provide a diversified portfolio managed by professionals. Whether it’s equity funds, debt funds, or hybrid funds, they all benefit from compounding.
Further, SIPs exemplify compounding. When you invest a fixed amount regularly (monthly), you buy more units when prices are low and fewer units when prices are high. Over time, this disciplined approach helps you magnify your wealth.
What is Compounding: The Key To Financial Freedom
Challenges of 15x15x15 Rule
- Market Volatility and Uncertainty: Stock markets are inherently unstable. Prices fluctuate in response to economic events such as inflation and changes in key interest rates such as CRR, Repo, and Reverse Repo.
It is also influenced by geopolitical tensions such as the Russia-Ukraine conflict, political events such as elections, and investor sentiment. Given the length of the list, maintaining a consistent 15% annual return may not always be possible due to market uncertainties.
- Risk of Short-Term Losses: Mutual funds are susceptible to market risk, and losses can be discouraging. No one can guarantee that your portfolio will have all gains or all green. So, you must remind yourself that losses are a part of the game.
- Realistic Expectations and Patience: You may choose to buy a new house or car, or you may go on a vacation with your friends. And you’ll need money for these. In such times of need, it can be difficult to stick to monthly investments.
10 Tips To Implement the 15x15x15 Strategy
- Goal Setting: Keep an eye on your investment goals. You have to split your goals based on your investment horizon.
If your goal is to save Rs. 1 crore to buy a house in the next ten years, you should make a monthly SIP of Rs. 35,886 with an annual return of 15%. So, having a clear vision of your goal is crucial when kicking off your Crorepati journey.
- Diversify: Select the right mutual funds. Look at historical returns. Consistent performers over 3 to 5 years are a good bet.
Spread your investments across different types of mutual funds—equity, debt, and hybrid. Diversification reduces risk.
- Expense Ratio Matters: Lower expense ratios mean more of your money stays invested. Aim for funds with reasonable costs.
- Risk Tolerance: Assess your risk appetite. Aggressive investors can opt for equity funds, while conservative ones may prefer debt funds.
- Set up Your Go-to Funds: Always keep a separate go-to or emergency fund to avoid tampering with your planned investments. To cover unexpected expenses such as car repairs, family events, job loss, or anything else, you should set aside at least 3-6 months of your monthly income as an emergency fund in a separate account.
- Start Early, Stay Consistent: Commit to regular investments. SIPs enforce discipline and harness the power of compounding. Automate your SIPs by setting up automatic transfers from your bank account to your mutual fund. No more excuses!
- Ignore Market Noise: Markets fluctuate. Stay focused on your long-term goals. Avoid panic selling during downturns.
- Review, Don’t Overreact: Periodically review your portfolio. Adjust if needed, but avoid knee-jerk reactions.
- Monitor Your Investments, Stay Informed: Keep an eye on your mutual fund performance. Use reliable sources for updates. Revisit your investment strategy annually. Adjust allocations based on changing goals or market conditions.
- Stay Committed: Even if returns seem modest initially, remember compounding works wonders over time.
No harm in dreaming of becoming a crorepati through investing under the 15x15x15 rule, but one has to be consistent, patient, and be disciplined before embarking on the travel to the crorepati destination.
The Bottom Line
Simply put, the 15x15x15 rule to become Crorepati is most productive when a few key points are kept in mind. For starters, because it is a long-term strategy, you must be extremely disciplined and consistent in your fund management efforts.
The magic of compounding for the exponential growth of funds only works if the investment is made consistently over the specified time.
Second, to reap large returns from your investments through the power of compounding, you must begin at a young age. But don’t be afraid to start, even if you think it’s a little late. The general rule is to remain committed to your goal.
Third, selecting the appropriate Mutual Fund plan requires a great deal of wisdom. All mutual funds do not deliver the growth rates they promise.
Finally, the stock market’s volatility has a direct impact on returns. As a result, the longer your investment is held, the more likely market volatility will be averaged out, resulting in higher returns.
Therefore, with patience, discipline, prudence, and an optimistic viewpoint, you can certainly fulfil your dream of becoming a Crorepati.
*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQ
What are some common mistakes to avoid when using this rule?
Try avoiding these few mistakes, as you start your journey to becoming a crorepati-
Skipping or irregular contributions can hinder the power of compounding.
Evaluate Your Risk Tolerance and Select Funds Accordingly.
Relying solely on one type of mutual fund or asset class can be risky. Spread Your Investments Across Equity, Debt, and Hybrid Funds.
Trying to time the market can backfire. Stay invested consistently regardless of short-term market fluctuations.Is the 15x15x15 strategy guaranteed to make me a Crorepati?
No, the 15x15x15 strategy does not guarantee that you will become a Crorepati. Because there are numerous factors at play, such as market volatility, unforeseen economic events, and emergencies that may require you to withdraw funds, a 15-year timeframe is used.
Thus, the 15x15x15 strategy provides only a framework for wealth creation via SIPs in Mutual Funds.How is the 15x15x15 rule different from other wealth-building strategies?
Flexibility: Compared to strategies requiring large lump sum investments, the 15x15x15 rule allows you to start small and gradually build wealth.
Focus on Compounding: By emphasizing consistent investments, it leverages the power of compounding interest for significant long-term growth.
Simplicity: The rule provides a clear relatively straightforward and beginner-friendly framework.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.