The magic of compounding in SIP investments! The 15x15x15 formula can make you a crorepati—check out the calculation..

The trend of building a substantial corpus over the long term through mutual fund SIPs is rapidly gaining momentum in India. Young investors and salaried professionals, in particular, are keen to achieve significant future financial goals by investing small amounts. Amidst this, the '15x15x15 formula' is being adopted by many investors; financial experts often regard it as a simple pathway to becoming a 'crorepati' (millionaire) over the long run.

This formula relies on the power of compounding. It emphasizes investing a fixed amount every month and maintaining the investment over an extended period. The earlier an investor starts and the longer they stay invested, the greater the benefits they can reap from compounding. However, investment returns depend on market performance and come with no guarantees.

What is the 15x15x15 formula?
According to a Zee Business report, the 15x15x15 formula is a straightforward investment strategy. The first '15' represents a monthly SIP of ₹15,000; the second '15' signifies a potential annual return of 15%; and the third '15' denotes continuing the investment for 15 consecutive years. The strategy aims to demonstrate to investors that substantial capital can be accumulated over time through regular investment and patience. This formula is primarily associated with equity mutual funds, which offer the potential for superior returns over the long term.

How can a corpus of ₹1 crore be built in 15 years?

If an investor contributes ₹15,000 monthly via SIP for 15 years, their total investment amounts to approximately ₹27 lakh. Assuming an average annual return of 15% on this investment, the fund's value at maturity could reach around ₹1 crore.

Compounding plays the most crucial role here. While fund growth may appear slow in the initial years, over time, the returns generated on the accumulated returns cause the investment to grow exponentially. This is precisely why long-term investing is considered an effective way to build a large corpus.

What are the benefits of SIP investments?
The biggest advantage of an SIP is that the investor does not need to time the market perfectly. They simply invest a fixed amount every month. This provides the benefit of cost averaging amidst market fluctuations.

Additionally, SIPs foster a habit of investing and help maintain financial discipline. Even those starting with small investments can build a substantial corpus over time. This is why SIPs are rapidly gaining popularity among middle-class families.

Points to consider before investing
Experts advise against investing with the assumption of a guaranteed 15% return. The performance of the stock market and equity funds can fluctuate over time. Therefore, investors should make decisions based on their risk appetite, financial goals, and investment horizon. Staying invested for the long term—and avoiding the mistake of stopping investments due to panic over temporary market downturns—is considered crucial for success. With the right plan and regular investing, even an average investor can build a significant fund for the future.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.